GoPro, Inc. (GPRO 7.47%) announced stronger-than-expected second-quarter 2018 results on Thursday after the market closed, detailing encouraging sell-through, continued progress on inventory management, and an impending return to profitability.
With shares up 17.7% Friday, let's have a closer look at what GoPro had to say.
IMAGE SOURCE: GOPRO.
GoPro's results: The raw numbers
| Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$282.7 million |
$296.5 million |
(4.7%) |
|
GAAP net income (loss) |
($37.3 million) |
($30.5 million) |
N/A |
|
GAAP earnings (loss) per share |
($0.27) |
($0.22) |
N/A |
DATA SOURCE: GOPRO. GAAP = generally accepted accounting principles.
What happened with GoPro this quarter?
- Revenue arrived above the high end of GoPro's latest guidance, provided in May, for a range between $260 million and $280 million.
- On an adjusted (non-GAAP) basis -- which excludes restructuring costs, stock-based compensation, and acquisition expenses -- GoPro's net loss was $20.8 million, or $0.15 per share, compared to a loss of $0.09 per share in last year's second quarter.
- Adjusted gross margin declined 5.4 percentage points year over year to 30.8%, but also arrived above guidance for the metric to be in the high 20% range.
- Adjusted EBITDA was a loss of $8.7 million, swinging from an adjusted EBITDA profit of $5.1 million this time last year.
- Camera units shipped increased 0.9% to 1.071 million, driven by continued strong demand for HERO6 Black and HERO5 Black cameras, which together comprised more than 60% of total units and 75% of all camera revenue.
- Average selling prices (ASP) declined ever so slightly to $264 (from $267 last quarter), easing concerns that the new $199 HERO camera model is cannibalizing sales of higher-end products.
- Inventory decreased by $47 million, to $86.1 million, for GoPro's lowest level since the first half of 2014.
- GoPro held 97% dollar share of the action-camera category this quarter, according to NPD Group data, remaining the No. 1 selling camera brand by unit volume for the 18th straight quarter.
- GoPro's new Fusion camera captured 48% dollar share of the spherical camera market.
- GoPro's $4.99-per-month GoPro Plus subscription grew 9% sequentially from last quarter, to over 160,000 active paying subscribers.
What management had to say
"We are on track; sell-through is solid in all regions indicating strong demand, and we believe GoPro will be profitable in the second half of 2018," stated GoPro founder and CEO Nick Woodman. "Our plan is to exit the year with an improved margin profile we believe translates into a profitable 2019."
Looking forward
During the subsequent conference call, GoPro CFO Brian McGee noted that the company sold 1.8 million cameras in the first half, and is targeting a total of 4.2 million units for the full year. Assuming a slight increase in ASPs, GoPro anticipates third-quarter revenue between $260 million and $280 million, down from $329.8 million in the same year-ago period. Most analysts were modeling Q3 revenue near the low end of that range.
What's more, GoPro told investors to expect fourth-quarter revenue of between $380 million and $400 million, which would mark a return to growth from sales of $334.8 million in last year's fourth quarter. GoPro also believes that will propel the company to adjusted (non-GAAP) profitability in the second half, followed by a full year of profitability and improved cash flow in 2019.
Of course, a lot can happen between now and then, and GoPro certainly has its work cut out for it -- including successfully launching three new products later this year to help drive that growth -- if it wants to meet those goals. But given its positive momentum, and with shares down nearly 40% over the past year leading into this report, GoPro stock is understandably rebounding in response right now.
