GoPro said it saw an immediate retail sales and GoPro subscription lift in the second quarter due to its mid-quarter go-to-market strategy shift that included a return to pre-pandemic pricing and a greater emphasis on retail sales.
The company reported exceeding its Q2 expectations for unit sales, revenue and subscriber growth, all positive indicators that the strategy shift is working.
“At the start of the COVID pandemic, we exited approximately 30 percent of our retail doors globally and focused on driving much of our business to GoPro.com as consumers primarily shop from home,” explained GoPro Founder and CEO Nicholas Woodman on a conference call with analysts. “We significantly reduced our marketing spend and raised camera prices by $100 over a two-year period due to supply chain constraints.”
Woodman said the strategy worked extremely well for GoPro during the pandemic yet limited its growth post-pandemic.
“With our updated go-to-market strategy, we saw an immediate uptick in demand at retail across all regions,” Woodman added. “This enabled our global sales team to hit the ground running, working closely with existing retail and distribution partners, re-engaging former partners, and adding highly motivated new partners.”
Woodman said the strategy is to grow the business with best-in-class distributors and retailers who span the spectrum from influential core specialty retailers who enhance the brand to larger big box retailers who drive volume and mass market awareness of our products.
“Enthusiasm among our distributors and retailers is high as they recognize the strength of our product line, our brand, and the opportunity to grow our respected businesses together,” he shared.
Woodman said he was excited about the pace at which Go Pro opens new doors, particularly in the EMEA, which was the hardest hit by the pandemic door count reductions.
“To date, we’ve opened nearly 800 new doors in EMEA, and we’re targeting approximately 2,000 total new doors worldwide by the end of 2023 with additional growth in 2024 and 2025,” he detailed. “In addition to new doors, we’re enhancing GoPro’s brand presence at retail with updated point-of-purchase displays.”
Revenue was $241 million for the second quarter, 10 percent above guidance but down 4 percent year-over-year. Revenue from the retail channel was $165 million, up 6 percent year-over-year. GoPro.com revenue, including subscription and service revenue, was $76 million, or 31 percent of total revenue, and down 21 percent year-over-year.
Woodman said an indication of the brand’s sell-through momentum, post-strategy shift, could be found in GoPro’s results during the Amazon Prime Day period.
“Circana reported that consumer spending over Amazon’s July Prime Day saw discretionary and general merchandise sales decrease 3 percent year-over-year with unit sales down 8 percent,” he indicated. “By contrast, during the same period, total GoPro camera unit sales for North America, which includes both our retail channels and GoPro.com, were up 6 percent year-over-year.”
Subscription and service revenue increased 21 percent year-over-year to $24 million. GoPro’s subscriber count ended Q2 at approximately 2.44 million, up 27 percent year-over-year.
The attach rate via the company’s mobile app from cameras purchased at retail exceeded 40 percent in the quarter, up from approximately 33 percent a year ago, an improvement of roughly 25 percent, year-over-year.
“To drive greater awareness of GoPro and to support revenue growth in the second half of this year, we are increasing our investment in marketing. We are partnering with key retailers to amplify awareness, leveraging our collective reach to excite consumers during our upcoming launch and throughout the holiday season,” Woodman said. “It’s great to be aligning once again with our retail partners in a meaningful way that we haven’t been able to do since before the pandemic.”
GAAP and non-GAAP gross margin was 31.4 percent of sales and 31.6 percent of sales, respectively, which reflects $11 million of price protection charges related to the new pricing strategy and the strength of the lower margin entry-level cameras; this compares to GAAP and non-GAAP gross margin of 38.3 percent of sales and 38.5 percent of sales, respectively, in the prior-year period.
In the quarter, the company posted a GAAP net loss of $17 million, or negative 11 cents per share, down from net income of $3 million, or 2 cents per share. In the prior-year period. The non-GAAP net loss was $11 million, or negative 7 cents per share, down from non-GAAP net income of $13 million, or 8 cents per share, in the prior-year period.
Adjusted EBITDA was negative $10 million compared to a positive $17 million in the prior-year period. The difference primarily reflects $11 million of price protection charges related to our new pricing strategy and the strength of our lower-margin entry-level cameras.
Go Pro cameras with retail prices at or above $400 represented 75 percent of the company’s Q2 2023 camera revenue. Entry-level products increased, accounting for 25 percent of its camera revenue without cannibalizing premium cameras. Second quarter 2023 Street ASP was $342, a 13 percent decrease year-over-year.
Days’ sales outstanding were 31 days, down from 32 days in the prior-year period.
Photo courtesy Go Pro/Arnau Mateu
