GoPro, Inc. exceeded guidance in the third quarter with revenue of $259 million and subscription and service revenue growth of 11 percent year-over-year, primarily driven by subscriber average revenue per user (ARPU) growth of 9 percent and overall subscriber growth of 2 percent. The company boasted of sequential improvements but also warned of the current challenges and headwinds going forward.

“Despite these directionally positive Q3 results, this continues to be a challenging year for GoPro as we navigate global macroeconomic headwinds impacting consumer discretionary spending, the delay of our new 360-degree camera and competition,” said Nick Woodman, founder, CEO and chairman, GoPro, Inc. in management comments posted before a November 7 conference call with analysts. “While GoPro welcomes fair competition because it encourages innovation and fosters a vibrant market for consumers, the principles of fair competition are not served by companies that seek to profit from the hard work, investment and innovation of others.”

Woodman stated that the company’s patent portfolio is in place to protect its inventions and IP, and it is committed to taking action to protect these assets when necessary.

“Earlier this year, we filed a complaint with the U.S. International Trade Commission (ITC) and a lawsuit in the U.S. District Court for the Central District of California against one of our competitors, with the goal to enforce certain GoPro patents related to our cameras and digital imaging technology,” he shared. “Again, GoPro welcomes fair competition, but we will litigate to protect our IP when we believe it is being infringed,” he said.

Woodman said the company would litigate to protect its inventions and understood the time and cost commitment required to defend GoPro’s IP.

“As we shared in our Q2 earnings [call], the consumer digital imaging market is growing, driven by new product introductions catering to consumers’ growing interest in alternative forms of capture beyond the phone,” he added. “We are seeing growth in the action camera market, 360-degree cameras and other new types of cameras. We believe our product roadmap positions us to participate in these growth areas and more.”

To better position GoPro to participate in the category’s growth as a profitable company in 2025 and beyond, it has taken a more aggressive approach to reduce 2025 operating expenses significantly below what it shared on its last earnings call.

“We are now targeting 2025 operating expenses of $250 million +/- $5 million, a reduction of approximately $110 million from 2024 assuming the midpoint of our operating expense guidance range,” Woodman stated.

“I want to be clear that we are not cutting our way to profitability,” he said in his statement, which will be delivered to analysts Thursday evening, November 7. “We are changing our approach to operate in a leaner, more focused manner that we believe will be sustainable and strategic for long-term success and improved financial performance.”

Woodman said the company is reducing its operating expenses to the lowest level since before going public while pursuing a product roadmap it believes will drive innovation, differentiation and growth.

Third Quarter Review
“In Q3, revenue of $259 million exceeded the midpoint of our guidance, and our subscriber base grew 2 percent to 2.56 million,” said Brian McGee, EVP, CFO and COO of GoPro, Inc. “Subscription and service revenue grew 11 percent year-over-year as ARPU grew 9 percent primarily related to long-term subscribers continuing to renew as well as growth in our Premium+ subscription.”

Revenue was $259 million in the third quarter, down 12 percent year-over-year.

Subscription and service revenue increased 11 percent year-over-year to $27.5 million, reported primarily due to improving retention rates and growth of Premium+ subscribers that resulted in 9 percent ARPU growth. GoPro subscriber count ended Q3 at 2.56 million, up 2 percent year-over-year.

Retail channel revenue was $208 million in Q3, or 80 percent of total revenue, down 10 percent year-over-year. GoPro.com revenue, including subscription and service revenue, was $51 million, or 20 percent of total revenue, down 19 percent year-over-year.

Third Quarter Performance Highlights

  • Subscription and service revenue grew 11 percent year-over-year to $27.5 million, primarily due to improving aggregate retention rates, up 4 percent year-over-year to 67 percent, and the growth of Premium+ subscribers, which resulted in 9 percent ARPU growth.
  • Subscribers grew 2 percent year-over-year to 2.56 million, including 54,000 Premium+ subscribers.
  • Subscription attach rate from cameras sold across all channels was 45 percent, in-line with prior-year attach rates.
  • Retail revenue was 80 percent of total revenue at $208 million, down 10 percent year-over-year.
  • GoPro.com product revenue was 9 percent of total revenue at $23 million, down 39 percent year-over-year.
  • Street average selling price (ASP) was $294, compared to $319 in Q3 2023.
  • Sell-through was slightly above 610,000 units, down 18 percent year-over-year.
  • Cameras with Manufacturer’s Suggested Retail Prices (MSRP) at or above $400 represented 74 percent of Q3 2024 camera revenue. Third quarter 2024 Street ASP was $294, an 8 percent decrease year-over-year.

Income Statement Summary
GAAP and non-GAAP gross margins were 35.5 percent and 35.6 percent, respectively; this compares to GAAP and non-GAAP gross margins of 32.0 percent and 32.2 percent, respectively, in the prior-year period.

GAAP net loss was $8 million, or a 5 cents loss per share, compared to a net loss of $4 million, or a 2 cents loss per share, in the prior-year Q3 period.

Non-GAAP net loss was $0.5 million, or breakeven on a per share basis, compared to non-GAAP net income of $9 million, or 6 cents per share, in the prior-year Q3 period.

Adjusted EBITDA was $5 million, a $39 million sequential improvement over the second quarter, compared to $7 million in the prior-year Q3 period.

Image courtesy GoPro