GoPro, Inc. GPRO reported unimpressive first-quarter 2020 results, with the bottom line and top line deteriorating on a year-over-year basis. However, direct-to-consumer operating model and accretive subscriber base were tailwinds amid the COVID-19 crisis.
On a GAAP basis, net loss in the March quarter came in at a loss of $63.5 million or 43 cents per share that is wider than a loss of $24.4 million or 17 cents per share in the year-ago quarter. The year-over-year deterioration was primarily caused by lower revenues and income tax expenses in the reported quarter.
Quarterly non-GAAP net loss came in at a loss of $49.6 million or 34 cents per share compared with a loss of $10.2 million or 7 cents per share in the year-ago quarter. The bottom line met the Zacks Consensus Estimate.
GoPro Inc Price, Consensus and EPS Surprise
GoPro Inc price-consensus-eps-surprise-chart | GoPro Inc Quote
GoPro generated revenues of $119.4 million, down 50.8% from $242.7 million in the year-ago quarter. In spite of in line preliminary results, the year-over-year decline in revenues was mainly caused by adversities induced by the COVID-19 pandemic. Nevertheless, the company witnessed an upward sell-through trend of GoPro Cameras amid this crucial hour. Also, the top line met the consensus estimate.
Markedly, GoPro’s Plus subscription service ended the reported quarter with 355,000 paid subscribers, up 69% from the prior-year quarter’s figure. Further, the organic viewership of GoPro content reached a record quarterly high of 243 million, up more than 40% from the year-ago quarter’s level.
Revenues from Americas came in at $57.3 million (47.9% of total revenues), down 47.5% from $109.1 million in the year-ago quarter. Revenues from EMEA were $29.7 million (24.9%), down 58.1% from $70.9 million and APAC generated $32.4 million (27.2%), down 48.3% from $62.7 million.
Revenues from Direct channel were $64.9 million (54.3% of total revenues), down 41.5% from $110.9 million. Revenues from Distribution channel came in at $54.5 million (45.7%), down 58.6% from $131.8 million year over year.
GoPro shipped 341,000 camera units during the reported quarter, down 59.5% year over year. The company had $172 million in inventory compared with $119 million in the year-ago quarter. Non-GAAP gross margin remained flat at 34.2% from the prior-year quarter’s level, driven by the implementation of direct-to-consumer operating model. Impressively, cameras with prices above $300 contributed nearly 90% to revenues in the reported quarter.
Cash Flow & Liquidity
During the first three months of 2020, GoPro utilized $68.3 million of net cash for operating activities compared with $65 million of cash utilization in the year-ago quarter. As of Mar 31, 2020, the company had $117.4 million in cash and cash equivalents with $151.4 million of long-term debt.
2020 Guidance Withdrawn
Thanks to the uncertainties pertaining to the COVID-19 crisis, GoPro has withdrawn its 2020 financial guidance. Currently, GoPro is undertaking direct-to-consumer growth initiatives with an effective operating business model. Consequently, this restructuring will result in an estimated charge of $31-$49 million.
Although the action video camera maker’s global distribution network has been severely impacted by the COVID-19 pandemic, the company stated that any kind of operational changes will not impact its 2020 product roadmap, which includes new hardware, software and subscription products. That said, the company will continue to sell its products to select leading retailers in key regions where consumers still prefer offline purchase. Notably, GoPro believes that a more direct-to-consumer-centric approach is better aligned with the present business climate as well as accretive to the average selling price of products and gross margin. This, in turn, will enable the company to position itself well when demand begins to normalize amid this hour of crisis.
Zacks Rank & Stocks to Consider
GoPro currently has a Zacks Rank #3 (Hold).
Some other better-ranked stocks in the broader industry are Emerald Expositions Events, Inc. EEX, Vista Outdoor Inc. VSTO and Panasonic Corporation PCRFY. While Emerald Expositions and Vista Outdoor sport a Zacks Rank #1 (Strong Buy), Panasonic carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Emerald Expositions’ bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 3.4%, on average.
Vista Outdoor’s bottom line surpassed the Zacks Consensus Estimate twice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 23.1%, on average.
Panasonic’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 46.4%, on average
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