The digital-sports camera maker, GoPro (GPRO, Financial), went public this June and in fact this was the first-quarter earnings release after its formal IPO. Last Thursday, after the company disclosed its third-quarter results, analysts cheered and GoPro’s shares which had gone down tumbling in early October surged 19% to a high of $81.13 making investors throw a sigh of relief. So is there a growing demand for GoPro’s product mix? How did it fare in the third quarter – was it so impressive as indicated through the stock movement. Let’s peek into the quarter highlights to derive the final answer.
The quarter numbers
Revenue came in to $280 million versus $266 million estimated by Wall Street analysts. The top line is up 46% compared to the year-ago quarter, and 14.5% up sequentially on the strength of its new camera lineup, including Hero4, which produces 4-K quality video. The company also released updates to GoPro Studio and the GoPro App, including HiLight Tag and Flux.
Earnings were at $0.12 a share, which outpaced the analysts’ expectations by $0.04 a share during the quarter.
The adjusted EBITDA was up by a whopping 320% year-over-year to $36.2 million. That makes it 41% up on a sequential basis. GoPro reported a remarkable hike of 101% in terms of cash flow generated from operations in the quarter which stood at $47 million, from $23.4 million reported in the similar quarter last year. Also cash and equivalents balance showed strength this quarter with $237.7 million as cash balance at the end of the quarter which was about 400% increment from $47.6 million in the similar quarter last year.
Demand for Hero4 –Â a prime contributor
The company cited data from research firm NPD Group that showed GoPro products accounted for the top three camera units sold in the U.S. in September, and seven of the top 10 such products sold during the month. Analysts have opined that the demand saw a further boost after the company released the Hero4 camera into the market.
According to some analysts unit growth was spectacular and was 33% higher year-over-year, which is a huge improvement from the second quarter of the fiscal year.
GoPro’s CEO and founder Nicholas Woodman stated, “The global scale and execution of our HERO4 launch made this the most successful rollout in GoPro’s history… HERO4 pushes the performance envelope of our Emmy Award-winning capture technology. Advancements in our desktop and mobile content management applications continue to make it easier for our customers to create and share compelling content stories that go on to virally drive awareness and demand for our business. This positions us well for an exciting holiday season.”
Stock movement has been eye-popping
Since the company went public in June at $24, the stock price did barely take a breather, and has moved up around 238% over the last four months. This shows that the company has been competent enough to create a winning streak.
The best part has been the 27% slide in share price in October, which was followed by 7.5% spike in share price in after-hours trading on Thursday after the earnings release. This indicates that the company has done exceptionally well this quarter.
To conclude
GoPro shares have been trading only for the past four months in the U.S. stock exchange, but its investors have every right to rejoice as the company’s products are gaining traction in the U.S. market. Hero4 launch has earmarked the winning edge for the company which has to regularly face challenges from rival companies. So let’s stay tuned and keep an eye on the forward moves of GoPro in the coming quarter.
