admin San Mateo-based GoPro, founded by Nicholas Woodman, updated its 2025 financial statements to include the warning after developments that followed its annual report filing in March. The disclosure adds to concerns already visible in its first-quarter performance, where revenue fell, gross margins collapsed and losses widened as the company struggled with higher component costs and softer demand for its core camera products.
The company said prices for critical memory components had increased by more than 80 per cent, with further increases expected through 2026. The pressure has been amplified by the global shift of memory capacity towards artificial intelligence data centres, where demand for high-bandwidth memory and advanced DRAM has drawn supply away from consumer electronics makers. That has left device companies exposed to higher costs, tighter availability and less flexibility in pricing.
GoPro’s financial position has become more fragile because the cost shock has arrived at a time when its revenue base is already shrinking. First-quarter revenue stood at $99m, down 26 per cent from a year earlier. Hardware revenue dropped by nearly a third, while sell-through fell to about 313,000 camera units, down 29 per cent. Subscription and service revenue, a business line that has helped cushion the company against hardware volatility, was broadly flat at $27m, but subscriber numbers declined 8 per cent to 2.26m.
Margins showed the scale of the squeeze. GoPro’s GAAP gross margin fell to 4.3 per cent from 32.1 per cent a year earlier, partly reflecting a $24.5m charge linked to component purchase commitments and a $4.5m sale of slow-moving inventory. The company posted a GAAP net loss of $81m, compared with a loss of $47m in the same quarter last year. Adjusted EBITDA was negative $50m, compared with negative $16m a year earlier.
The going-concern warning also points to pressure from GoPro’s financing arrangements. The company has a $50m second-lien term loan with Farallon Capital Management, a revolving credit facility with Wells Fargo Bank, and an agreement with YA II PN Ltd for up to $50m in convertible debentures. These arrangements include covenants and cross-default provisions, meaning a breach in one facility could trigger consequences across others.
GoPro has warned that the going-concern language may itself be treated as an event of default under its credit agreements. It has also said it does not expect to comply with certain future covenants, including minimum liquidity, EBITDA and asset-coverage requirements. If lenders were to accelerate repayment obligations, GoPro has said it does not expect to have sufficient liquidity to meet all amounts due.
Management is seeking waivers or amendments from lenders, evaluating additional financing, considering asset sales and reviewing strategic alternatives. The company has also authorised a process to assess options including a sale, merger or other transaction, with Houlihan Lokey engaged as financial adviser. These moves come alongside another restructuring plan that is expected to reduce global headcount by about 23 per cent and result in severance costs of roughly $11.5m to $15m.
GoPro is attempting to reposition its business beyond mainstream action cameras. Its MISSION 1 Series, aimed at professional imaging markets, has been presented as a key product initiative. The company has also highlighted potential opportunities in defence, aerospace and strategic partnerships, arguing that its technology, intellectual property and brand carry value beyond its legacy consumer hardware base.
Those efforts face a difficult market backdrop. GoPro continues to rely heavily on camera, mount and accessory sales, a category exposed to discretionary spending, retailer inventory cycles and competition from smartphones and lower-cost imaging devices. Its brand remains widely recognised, but the wider consumer electronics market has become more challenging as component inflation forces manufacturers either to absorb costs or raise prices at a time when buyers are more selective.
