GoPro’s Q3 Sales Jump 37 Percent

GoPro Inc. reported revenue in the third quarter was $330 million, up 37 percent year-over-year,;gross margins were approximately 40 percent; and adjusted EBITDA was $36 million, up $109 million year-over-year.

The company’s results in the latest quarter exceeded Wall Street’s targets although its fourth-quarter guidance was below Wall Street estimates.

“GoPro has turned a corner, restoring growth and profitability to our business,” said founder and CEO Nicholas Woodman. “We are dedicated to growing as an innovative company, while being a vigilant steward of shareholder capital.”

“During the quarter we generated $47 million in cash and gross margins were 40 percent. Year-over-year, we grew revenue by 37 percent and dramatically reduced operating costs without impacting our product roadmap. We launched our premium-priced HERO6 Black with global on-shelf availability and strong critical acclaim. We are now focused on driving consumer demand to reach our goal of full-year double-digit revenue growth and non-GAAP profitability.”

GAAP net income for the third quarter was approximately $15 million, or 10 cents per share — a sharp improvement over a GAAP net loss of $104 million in the third quarter of 2016. Non-GAAP net income for the third quarter was $21 million, or 15 cents per share. Wall Street’s consensus estimate had been 2 cents on sales of $313.8 million.

Other Highlights

• GoPro strengthened its balance sheet, generating $47 million in cash, ending the third quarter with a cash balance of $197 million.
• Average sales price (ASP) increased by 22 percent year-over-year and 3 percent sequentially. Increased ASP was a primary contributor to stronger margins in the quarter and driven by the strong performance of the premium-priced HERO6.
• Quarterly operating expenses reached a 3-year low. GAAP operating expenses were down 6 percent sequentially and down 7 percent on a non-GAAP basis. GoPro is tracking toward a non-GAAP operating expense goal of less than $490 million in 2017 (or approximately $570 million of GAAP operating expenses), down over 30 percent year-over-year.
• HERO6 Black launched on September 28. Powered by GoPro’s custom-designed GP1 processor, HERO6 achieves an entirely new level of performance including stunning 4K60 and 1080p240 video and the most advanced video stabilization ever achieved in a GoPro. HERO6 Black launched globally with strong sales execution and a 93 percent channel fill rate at retail.
• Prior to the HERO6 launch, HERO5 Black was the best-selling digital image camera in the U.S. for four straight quarters — holding that chart position since its launch in 2016, according to The NPD Group’s Retail Tracking Service.
• Fusion will begin shipping in November. Fusion is a 5.2K spherical camera which captures a 360-degree perspective, so users never miss a shot. With the GoPro App, Fusion users can share footage as VR content or, using the app’s OverCaptureTM feature, “punch out” a traditional fixed-perspective video or photo from any angle in the spherical shot. OverCapture is scheduled to launch in the GoPro App in January.
• GP1 processor maximizes GoPro’s capabilities. The new chip enables twice the video frame rates, improved image quality, dynamic range, low-light performance and dramatically improved video stabilization over previous HERO camera generations. GP1 automatically enables vibrant videos and stunning photos without forcing users to manage complex image settings. GP1 also advances GoPro’s capabilities in computer vision and machine learning, enabling HERO6 to analyze visual scenes and sensor data for improved image quality and automated QuikStories.
• GoPro achieved strong revenue growth across all key regions. Growth in the Americas was up 20 percent year-over-year. EMEA was up 26 percent year-over-year. APAC was up 153 percent year-over-year. More than 50 percent of GoPro’s revenue was generated in markets outside of the U.S. in the third quarter.
• Strong momentum continues in key Asian markets. GoPro is seeing strong and sustained results in Asia. Sell-thru year-over-year unit growth in Japan was up over 99 percent and China was up 25 percent, according to GfK.
  GoPro’s drone, Karma, was the #2 selling drone in the U.S. priced $1,000 and above during the six months ending September 2017, according to the NPD Group’s Retail Tracking Service.
• The Quik Mobile Video Editing App was installed 18 million times year-to-date. Third quarter monthly active users was up 30 percent sequentially and 155 percent year-over-year.
• GoPro gained more than 900,000 new social media followers in the third quarter. Instagram followers were up 30 percent year-over-year to more than 14 million, with more than a 470,000 increase in international followers.
• GoPro content was viewed more than 550 million times in the first nine months of 2017, up more than 27 percent year-over-year. In the same period, GoPro content on YouTube saw an 85 percent increase in median organic viewership per video.
• GoPro added Golden State Warriors President and Chief Operating Officer Rick Welts to its Board of Directors.

Business Outlook

GoPro is providing the following guidance:

• Fourth Quarter 2017
  • Revenue of $470 million +/- $10 million
  • GAAP and Non-GAAP gross margin of 41.5 percent +/- 50 basis points
  • GAAP operating expenses of $149 million +/- $1 million
  • Non-GAAP operating expenses of $130 million +/- $1 million
  • GAAP EPS to be between 25 cents and 35 cents
  • Non-GAAP EPS to be between 37 cents and 47 cents

Analysts had projected earnings per share in the fourth quarter of 57 cents on revenue of $521.2 million, according to Thomson Reuters consensus estimates.

• Full Year 2017
  • Revenue of $1.315 billion +/- $10 million
  • GAAP operating expenses below $570 million
  • Non-GAAP operating expenses below $490 million
  • GAAP EPS to be between (65 cents) and (55 cents)
  • Non-GAAP EPS to be between (2 cents) to 8 cents.

Photo courtesy GoPro