According to the news report by Reuters, on Wednesday, GoPro Inc. released its earnings report and announced a profit for the first time in five quarters. The company also beat Wall Street’s estimates on revenue. The company did this by cutting costs, but a strong demand for GoPro’s latest action camera from the flagship line – GoPro HERO.
The company’s mounted cameras are popular with millions, from extreme sportsmen to Instagram travel bloggers, however, their cost is one of the obstacles to growth. Now, GoPro has launched less expensive cameras to help increase demand.
The action camera company also focused on cost cutting through cutting its staff and has removed itself from a failing drone market. These measures have helped the company boost its profits. Even then, the company is still facing strong competition from the smartphone market because cameras on smartphones are always improving.
GoPro’s stock went up by 2% in late trading, paring gains from the 10% jump the company experienced during regular trading. Since the beginning of this year, the company’s stocks are up by 21.5%.
GoPro gained on market share in Asian countries, including Japan, Korea, China and Thailand. In the US, the company stated that it already had an 87% share of the action camera market in terms of units sold.
Wedbush Securities’ analyst Alicia Reese stated that it looked like GoPro had planned its fourth quarter inventory accurately. She said that HERO7 Black did very well in the last quarter. This drove average sales prices up by 20%.
According to the Chief Financial Officer Brian McGee, the GoPro HERO7 Black, which costs $400 per unit, was the company’s top seller in December, without any discounts being given.
GoPro also forecast revenues to be in the $510 million to $550 million range for the first six months of 2019.
GoPro’s Chief Executive Officer Nicholas Woodman issued a statement that with the current momentum and a continuous focus on cost management, the company was planning for growth as well as profitability this year.
The action camera company reported a fourth quarter net income of $32 million. The same time a year ago, the company had reported net losses of $55.9 million.
Adjusting for one-time items, GoPro had earnings per share (EPS) of $0.30, which was above the market estimate of $0.26 per share.
Revenues shot up to $377 million, a 13% jump which also beat analyst expectations of $374.2 million.
MarketWatch gave further details.
The publication reported that Woodman also said that GoPro had never been stronger and their products had never been better. He also said that they were fired up to face the year.
The cost cutting measures that the company took were mostly staff layoffs. In 2016, GoPro had a staff of 1,552 employees. However, by the end of 2017, that number had dropped to 1,273. And on Wednesday, Woodman stated that the company had downsized further and now had only 841 employees.
While the company sells a niche product, but the CEO has understood that rather than trying to reach a mass market, it makes more sense to focus on core users and offer them value added services such as low-cost storage on the cloud for the photos and videos.
GoPro said that it expected its revenues to grow by a range of 5% to 8% in 2019, which is slightly higher than market estimates of 4%.
The company’s executives stated that they expect GoPro’s revenues to keep growing. They also said that they were expecting added revenues from fresh avenues of recurring revenue generation, such as its GoPro Plus subscription services.