Boosted by a strong early response to the launch of the Hero 6, GoPro Inc. hiked its guidance for revenue and gross margin for its third quarter ended September 30. Shares of GoPro closed at $10 on Thursday, up $1.10, or 12.4 percent.
Speaking at the Citi Global Technology Conference in New York City on Thursday, Brian McGee, GoPro’s CFO, said the launch of Hero 6, just starting to hit retail, has “been phenomenal” and will represent GoPro’s “first true global launch”
Another factor driving the upside in the quarter is better margins from the Hero 6. Sell-through in general in July was also “really, really good, followed on by very good sales in the month of August.”
Every region was up for the year in both units and dollars through August. In the U.S., the gains were led by Amazon Prime Day, led by the GoPro Hero5 Session, which saw a 36 percent discount. Internationally, France was particularly strong, China was up double digits and Japan grew 125 percent. McGee said international sales are being helped by enhanced POP materials as well as investments in local teams.
The Karma drone is also contributing to the sale gains as it rolls out in the U.S. and international markets.
Revenue and gross margin for the third quarter of 2017 are both expected to be at the high end of its previously announced respective ranges of between $290 million and $310 million and between 36 and 38 percent. GoPro also forecast that the third quarter to be profitable on a non-GAAP basis, though not profitable on a GAAP basis.
“Consumer demand for GoPro products is strong,” said GoPro COO CJ Prober. “Channel inventories have been reduced and we’re incredibly excited about the upcoming launch of two great new products, HERO6 and our 5.2K spherical camera, Fusion.”
Prober, also speaking at the conference, said the company is comfortable with its goal set earlier in the year to be profitable on a non-GAAP basis for all of 2017 and post double-digit revenue growth. He said the third quarter marks “really just another proof point in our turnaround” success following admitted challenges that started 18 months ago. Missteps included a delay in the launch of its Karma drone and production issues with its Hero 5 camera.
He said the company has achieved a “solid Q1” and a “great Q2” and the third quarter performance “sets up for a great 2017.”
“The thing that’s really exciting is we’re achieving those results in a fairly constrained manner,” said Prober. As a result, inventories are expected to be clean entering 2018. He added, “We’re not chasing demand.”
Prober also said that while GoPro is supporting the growth seen in digital imaging, the bigger opportunity for GoPro is becoming an extension to the smartphone to support to support WeChat, Instagram and all forms of social sharing. Said Prober, “We really want to enable experiences and immersive content that addresses the needs of those communities and it’s just beginning.”
Photo courtesy GoPro