GoPro Misses Q2 EPS Estimates, Promises 2H19 Rebound

GoPro Misses Q2 EPS Estimates, Promises 2H19 Rebound
August 5, 2019


Action video camera manufacturer GoPro, Inc. (Nasdaq: GPRO) reported fiscal 2019 second-quarter revenue that increased from last year. However, the company missed both top line and bottom line estimate of analysts. Notably, on a non-GAAP basis, the company swung to a profit in the June quarter. The increase in sales was led by robust demand for HERO7 cameras and efficient implementation of operational strategies. Lower expenses and better inventory management also enabled the company to post a non-GAAP profit. The stock closed at $4.39, down $0.64 or 12.72% from prior close.

San Mateo, California-based company reported Q2 2019 revenues of $292.40 million, an increase of 3.4% from $282.68 million in the similar period last year. Analysts had anticipated the company to post revenues of $301 million for the quarter ended June.

For the recent quarter, net loss narrowed to $11.30 million, or $0.08 per share, from $37.30 million, or $0.27 per share, in the year-ago period. Excluding charges, the company reported non-GAAP net income of $4.20 million or $0.03 per share, compared with a net loss of $20.80 million or $0.15 per share in 2Q18. The non-GAAP earnings missed the Zacks Consensus Estimate by a cent.

The company delivered 1.10 million camera units in the second quarter, up 1% on a y-o-y basis. Notably, HERO7 Black camera accounted for over 85% of total camera revenues.

For 2Q19, GAAP gross margin increased to 35%, from 29% last year. Non-GAAP gross margin grew to 36%, from 31% in the same period last year.

GoPro used $66 million cash in operation related activities in the first half of fiscal 2019, down from $100.60 million in the comparable quarter last year. The company ended the second quarter with cash and investments worth $130 million. Long-term debt stood at $143.80 million.

GoPro brought down 2Q19 GAAP and non-GAAP operating costs by $5 million and $7 million, representing a y-o-y reduction of 4% and 6%, respectively.

GoPro’s Plus subscription service exceeded 252,000 active paying subscribers at the end of July 31st, 2019, reflecting an increase of 15% from the previous quarter and a rise of over 50% on y-o-y basis.

GoPro anticipates converting the strong momentum and control over expenses into sustained growth and net profit through this year and beyond. Given the excellent demand for its products, the company is hopeful of performing well in the future. The company also aims to improve its Plus subscription service via improved benefits and user consciousness and intends to work more efficiently with its retail associates, including those in North America and elsewhere.

GoPro is also investing in merchandising and retail advertising to grow its brand while continuing to develop a new range of products. The company also aims to widen its presence in emerging markets such as India.

The earnings and revenue miss is expected to keep the stock weak in the short-term despite an improvement in overall performance.

Technically, the stock is facing resistance at 5.60. The MACD indicator’s reading has turned negative. Furthermore, the stock is trading below its 50-day moving average. As a result, we can expect the stock to move down in the short-term.

gpro - technical analysis - 5th Aug 2019

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Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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