GoPro Beats Estimates and Forecasts Return to Profitability

GoPro Inc. reported second-quarter earnings that beat analysts’ estimates, benefiting from renewed demand for its tiny, cube-shaped action cameras ahead of the introduction of a new model later this year.

Key Points

  • Revenue declined 47 percent to $220.8 million in the second quarter from a year earlier, exceeding analysts’ average estimate of $194.7 million
  • The adjusted loss was 52 cents a share in the period, GoPro said Wednesday in a statement. Analysts on average had projected a loss of 59 cents.
  • The company maintained its full-year revenue forecast of $1.35 billion to $1.5 billion.
  • GoPro projected net income profitability for the fourth quarter of 2016. 

The Big Picture

GoPro has struggled to convince investors it has a plan beyond selling little rugged cameras to its core fan base of adventure enthusiasts and amateur filmmakers. The stock has fallen 80 percent over the past year as the market lost patience waiting for an improvement in software and a delayed rollout of its highly anticipated drone. Chief Executive Officer Nicolas Woodman is betting new products like the Karma drone and the Hero5 camera -- to be released in the second half of 2016 -- virtual-reality cameras and a media licensing strategy could provide a longer-term road map for growth.

The Detail

  • GoPro’s net loss was $91.8 million in the quarter, compared with a profit of $35 million a year earlier.
  • Units shipped increased 8 percent from a quarter earlier to 759,000. That compares with more than 1.6 million units sold a year earlier.
  • The Hero5 camera and Karma drone are slated to be introduced ahead of the holiday season.
  • Inventory declined $50 million, or 36 percent, from the first quarter to $90 million, the lowest inventory level since the second quarter of 2014.

Interview with President Tony Bates

  • “The real story is that we see strong consumer demand for GoPro. We’ve seen a major reduction in our inventory levels.”
  • “We feel very well-positioned for the launch of our new products.”
  • “There’s big growth in China and Japan, we’ve entered India for the first time, added store count in Korea. We feel really well-positioned going into the second-half of the year.”

Street Views

  • “It’s just another transitional quarter,” said Andrew Uerkwitz, an analyst at Oppenheimer & Co. “It looks like they’re having better success than previously thought, but at this point it’s a wait-and-see approach until we get to the new product launches.”
  • “From a stock perspective, it looks like it’s found a bottom,” Uerkwitz said. “Management may be making it difficult on themselves by making big pronouncements like profitability in Q4. They may be setting expectations a little too high, but that remains to be seen.”
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