GoPro Shatters Q3 Expectations With HERO4 Launch

GoPro Inc. blew through Wall Street expectations Thursday when it reported revenue grew 45.7 percent to $280.0 million in the third quarter ended Sept. 30 thanks to the highly successful launch of its new HERO4 wearable cameras.

The camera maker reported net income attributable to common stockholders reached of $14.6 million, or $0.10 per diluted share, compared to a GAAP net loss attributable to common stockholders of ($1.1) million or ($0.01) per diluted share in the third quarter of 2013. Consensus estimates called for sales of $264.5 million and net income of $0.08 per share.

“The global scale and execution of our HERO4 launch made this the most successful roll out in GoPro’s history,” said GoPro founder and CEO, Nicholas Woodman. “HERO4 pushes the performance envelope of our Emmy Award winning capture technology. Advancements in our desktop and mobile content management applications continue to make it easier for our customers to create and share compelling content stories that go on to virally drive awareness and demand for our business. This positions us well for an exciting holiday season.”

The maker of wearable cameras reported GAAP gross margin was 44.3 percent, compared to gross margin of 33.3 percent in the third quarter of 2013 and 42.1 percent in the second quarter of 2014.  Third quarter GAAP operating income was $13.5 million, compared to an operating loss of ($0.7) million in the third quarter of 2013 and an operating loss of ($16.7) million in the second quarter of 2014.

GoPro recorded GAAP net income attributable to common stockholders in the third quarter of 2014 of $14.6 million, or $0.10 per diluted share. This compares to a GAAP net loss attributable to common stockholders of ($1.1) million or ($0.01) per diluted share in the third quarter of 2013 and GAAP net loss attributable to common stockholders in the second quarter of 2014 of ($19.8) million or ($0.24) per diluted share.

Non-GAAP gross margin in the third quarter of 2014 was 44.5 percent, compared to 33.5 percent in the third quarter of 2013 and 42.2 percent in the second quarter of 2014. Non-GAAP operating income in the third quarter of 2014 was $27.6 million, compared to operating income of $2.3 million in the third quarter of 2013 and operating income of $17.8 million in the second quarter of 2014.

Non-GAAP net income in the third quarter of 2014 was $18.0 million or $0.12 per diluted share, compared to net income of $1.0 million or $0.01 per diluted share in the third quarter of 2013 and net income of $11.8 million or $0.08 per diluted share in the second quarter of 2014. GoPro’s non-GAAP net income excludes the effect of stock-based compensation, amortization of acquired intangible assets and the tax impact of these excluded items.

Cash and cash equivalents were $237.7 million at Sept. 30, 2014, up $190.1 million from Sept. 30, 2013 and $132.9 million from June 30, 2014.  Cash flow from operations for the third quarter was $47.0 million, compared to $23.4 million in the third quarter of 2013 and ($14.2) million in the second quarter of 2014.

Third Quarter and Recent GoPro Highlights Include:

• Introduced HERO4 Black, offering twice the performance of the previous Black edition; HERO4 Silver, featuring GoPro’s first built-in touch display; and HERO, the perfect, entry-level GoPro.
• Executed the most successful product launch in company history, measured by sales, media impressions, and efficient inventory management.
• Announced several updates to GoPro Studio and the GoPro App, including HiLight Tag and Flux.
• The Share the Stoke campaign encouraged GoPro’s community of 130 sponsored athletes to post their HERO4 content; in just 25 days, athletes such as Kelly Slater and Julia Mancuso posted more than 3,000 photos and videos, reaching more than 50 million fans and generating close to eight million interactions.
• Released new accessories including The Handler, Smart Remote and Fetch, the first mount for pets.
• With the launch of HERO4, monthly content submissions to GoPro’s Video of the Day and Photo of the Day site jumped approximately 160 percent from September to October.
• GoPro content published on YouTube in Q3 was up 92% year over year; views on GoPro’s YouTube channel were up 99%; video minutes watched on GoPro’s YouTube channel were up more than 133% year over year.
• According to September NPD data, GoPro products represented the top three products in the digital camera and camcorder category, by units sold, and seven of the top ten camera accessory products, by units sold, in the U.S.
• Expanded Best Buy in-store retail presence with 12-foot displays and 40″ monitors, rolling out in many stores nationwide this holiday season.