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GoPro (GPRO) Misses Earnings and Revenue Estimates in Q2

Zacks Equity Research

GoPro, Inc. GPRO reported lower-than-expected second-quarter 2019 results, wherein both the top line and the bottom line missed the respective Zacks Consensus Estimate. However, the action video camera maker’s performance was largely driven by strong demand for HERO7 cameras and diligent execution of operational plans. Lower operating expenses and inventory management also acted as tailwinds.

Net Loss

On a GAAP basis, net loss for the June quarter was $11.3 million or loss of 8 cents per share compared with net loss of $37.3 million or loss of 27 cents per share in the year-ago quarter. The year-over-year improvement was primarily due to top-line growth and lower operating expenses.

However, non-GAAP net income came in at $4.2 million or 3 cents per share against net loss of $20.8 million or loss of 15 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by a penny.

GoPro, Inc. Price, Consensus and EPS Surprise

GoPro, Inc. Price, Consensus and EPS Surprise

GoPro, Inc. price-consensus-eps-surprise-chart | GoPro, Inc. Quote

Revenues

GoPro generated quarterly revenues of $292.4 million, up 3.4% year over year with growth in all geographic regions. The top line, however, lagged the consensus estimate of $301 million.

The company shipped 1.1 million camera units during the reported quarter, up 1% year over year. This was mainly due to solid demand for the flagship HERO7 Black camera, which accounted for more than 85% of total camera revenues.

Cash Flow & Liquidity

GoPro utilized $66 million of net cash in operating activities during the first six months of 2019 compared with cash utilization of $100.6 million in the year-ago period. As of Jun 30, 2019, the company had $91.3 million in cash and equivalents with $143.8 million of long-term debt.

Going Forward

GoPro expects to translate the healthy momentum and controlled cost in its business into growth and profitability through 2019 and beyond. The company is optimistic about its prospects, mainly on account of strong demand for its products in end markets. It plans to enhance its Plus subscription service through enhanced benefits and user awareness and aims to work more closely with its retail partners, both in North America and abroad.

GoPro is also making investments in merchandising and retail advertising to drive bigger brand presence while continuing to innovate. It intends to expand footprint in emerging markets like India and is focused on scaling its CRM efforts to augment customer base.

Zacks Rank & Stocks to Consider

GoPro currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are Hasbro, Inc. HAS, Mattel, Inc. MAT and Take-Two Interactive Software, Inc. TTWO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hasbro surpassed earnings estimates twice in the trailing four quarters, the average positive surprise being 95.2%.

Mattel surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 49.7%.

Take-Two surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 25.3%.

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