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Why Is GoPro (GPRO) Down 13.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for GoPro (GPRO - Free Report) . Shares have lost about 13.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is GoPro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
GoPro Reports Q1 Loss
GoPro reported first-quarter 2024 non-GAAP loss of 21 cents per share, narrower than the Zacks Consensus Estimate of a loss of 24 cents. The company incurred a loss of 18 cents in the year-ago quarter.
It generated revenues of $155.5 million, down 11% year over year. The top line beat the consensus mark by 5.6%.
Revenue growth in the Retail business segment along with increasing subscriber base cushioned the top-line performance.
Quarter in Details
GoPro shipped 393 million camera units during the reported quarter, down 14.9% year over year.
It recorded 2.5 million subscribers, marking 6% year-over-year growth at the end of the quarter under discussion.
Management envisions subscribers at 2024-end to be between 2.5 million and 2.6 million.
Region-wise, revenues from the Americas totaled $76.6 million (49.2% of total revenues), down 14% from the prior-year levels. Revenues from Europe, the Middle East and Africa of $52 million (33.5%) improved 13% year over year. The Asia Pacific generated revenues of $26.9 million (17.3%), down 31% on a year-over-year basis.
Based on channels, revenues from GoPro.com of $49.2 million (31.6%) plunged 48.1% year over year. Our estimate was pegged at $69.1 million.
In this channel, hardware revenues totaled $23.3 million compared with $71.7 million in the prior-year quarter. Subscription revenues amounted to $25.9 million, up 12% year over year.
Retail channel registered revenues of $106.3 million (68.4%), which grew 33% year over year. The uptick was driven by strategic pricing action, increasing retail doors and retail efforts including merchandising. We suggested the metric to be $78 million.
Management noted that it added more than 4,200 new retail doors since the second quarter of 2023. It further announced that it remains on track to add another 3,000 to 6,000 new doors by the end of 2025, to boost its go-to-market capabilities for its product roadmap.
It is also planning to upgrade its point-of-purchase merchandisers, augment in-store brand presence and boost account management throughout the retail channel.
The company had $131.3 million in inventory compared with $154.8 million in the year-earlier quarter.
Other Details
Gross profit of $53 million increased 1% year over year. Total operating expenses of $94.5 million rose 2.3% year over year. Operating loss totaled $41.4 million compared with $39.8 million in the prior-year quarter.
Non-GAAP gross margin came in at 34.4% compared with 30.3% in the year-ago quarter.
Adjusted EBITDA loss was $29.3 million compared with $27.5 million a year ago.
Cameras with suggested retail prices at or above $400 contributed 70% to revenues in the reported quarter compared with 87% in the prior-year quarter. Entry-level products accounted for 20% of camera revenues in the first quarter.
Cash Flow & Liquidity
In the quarter under review, GoPro used $98.4 million of net cash from operating activities compared with $67.1 million in the year-earlier quarter.
As of Mar 31, the company had $133.7 million of cash and cash equivalents with $92.7 million of long-term debt.
Guidance
For the second quarter of 2024, revenues are estimated to be $170 million (+/- $5 million). Non-GAAP adjusted loss is forecast to be 26 cents per share (+/- 2 cents).
Gross margin is anticipated to be 30% (+/- 50 basis points). Street ASP is projected to be nearly $330.
Owing to the development process taking longer than anticipated, management expects the launch of new entry-level camera in the third quarter of 2024 instead of the second quarter. The new 360 camera is expected to be launched in the fourth quarter now. The delay in launches will have a negative impact of $65-$85 million on revenues in 2024.
As a result, the company now expects units to be 2.85 million whereas revenues to be slightly above $900 million for 2024.
Apart from the delays, muted consumer spending in absence of promotional activity, declining camera sales at GoPro.com, global macroeconomic concerns and increasing competition remain headwinds.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -69.84% due to these changes.
VGM Scores
At this time, GoPro has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, GoPro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is GoPro (GPRO) Down 13.2% Since Last Earnings Report?
A month has gone by since the last earnings report for GoPro (GPRO - Free Report) . Shares have lost about 13.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is GoPro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
GoPro Reports Q1 Loss
GoPro reported first-quarter 2024 non-GAAP loss of 21 cents per share, narrower than the Zacks Consensus Estimate of a loss of 24 cents. The company incurred a loss of 18 cents in the year-ago quarter.
It generated revenues of $155.5 million, down 11% year over year. The top line beat the consensus mark by 5.6%.
Revenue growth in the Retail business segment along with increasing subscriber base cushioned the top-line performance.
Quarter in Details
GoPro shipped 393 million camera units during the reported quarter, down 14.9% year over year.
It recorded 2.5 million subscribers, marking 6% year-over-year growth at the end of the quarter under discussion.
Management envisions subscribers at 2024-end to be between 2.5 million and 2.6 million.
Region-wise, revenues from the Americas totaled $76.6 million (49.2% of total revenues), down 14% from the prior-year levels. Revenues from Europe, the Middle East and Africa of $52 million (33.5%) improved 13% year over year. The Asia Pacific generated revenues of $26.9 million (17.3%), down 31% on a year-over-year basis.
Based on channels, revenues from GoPro.com of $49.2 million (31.6%) plunged 48.1% year over year. Our estimate was pegged at $69.1 million.
In this channel, hardware revenues totaled $23.3 million compared with $71.7 million in the prior-year quarter. Subscription revenues amounted to $25.9 million, up 12% year over year.
Retail channel registered revenues of $106.3 million (68.4%), which grew 33% year over year. The uptick was driven by strategic pricing action, increasing retail doors and retail efforts including merchandising. We suggested the metric to be $78 million.
Management noted that it added more than 4,200 new retail doors since the second quarter of 2023. It further announced that it remains on track to add another 3,000 to 6,000 new doors by the end of 2025, to boost its go-to-market capabilities for its product roadmap.
It is also planning to upgrade its point-of-purchase merchandisers, augment in-store brand presence and boost account management throughout the retail channel.
The company had $131.3 million in inventory compared with $154.8 million in the year-earlier quarter.
Other Details
Gross profit of $53 million increased 1% year over year. Total operating expenses of $94.5 million rose 2.3% year over year. Operating loss totaled $41.4 million compared with $39.8 million in the prior-year quarter.
Non-GAAP gross margin came in at 34.4% compared with 30.3% in the year-ago quarter.
Adjusted EBITDA loss was $29.3 million compared with $27.5 million a year ago.
Cameras with suggested retail prices at or above $400 contributed 70% to revenues in the reported quarter compared with 87% in the prior-year quarter. Entry-level products accounted for 20% of camera revenues in the first quarter.
Cash Flow & Liquidity
In the quarter under review, GoPro used $98.4 million of net cash from operating activities compared with $67.1 million in the year-earlier quarter.
As of Mar 31, the company had $133.7 million of cash and cash equivalents with $92.7 million of long-term debt.
Guidance
For the second quarter of 2024, revenues are estimated to be $170 million (+/- $5 million). Non-GAAP adjusted loss is forecast to be 26 cents per share (+/- 2 cents).
Gross margin is anticipated to be 30% (+/- 50 basis points). Street ASP is projected to be nearly $330.
Owing to the development process taking longer than anticipated, management expects the launch of new entry-level camera in the third quarter of 2024 instead of the second quarter. The new 360 camera is expected to be launched in the fourth quarter now. The delay in launches will have a negative impact of $65-$85 million on revenues in 2024.
As a result, the company now expects units to be 2.85 million whereas revenues to be slightly above $900 million for 2024.
Apart from the delays, muted consumer spending in absence of promotional activity, declining camera sales at GoPro.com, global macroeconomic concerns and increasing competition remain headwinds.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -69.84% due to these changes.
VGM Scores
At this time, GoPro has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, GoPro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.