GoPro predicts profit, thanks to massive layoffs

Company expects to flip to profit in 2019 despite single-digit revenue growth, thanks to chopped expenses

Feb 6, 2019

GoPro Inc. Chief Executive Nick Woodman sounded very bullish Wednesday in forecasting a return to profitability in 2019 for the action-camera maker.

“GoPro’s brand has never been stronger, our products never better,” Woodman told analysts. “And we are fired up for the year ahead.”

GoPro announced earnings slightly above Wall Street’s expectations Wednesday afternoon, breaking a long streak of messing up the holiday quarter. Woodman said that the company plans to “capitalize on this momentum, expanding growth and profitability with a commitment to keeping operating expenses at or below $400 million.”

But don’t get overexcited about GoPro’s future. Woodman’s last comment about its goal to keeping its operating expenses at or below $400 million is key, because it shows how he has accomplished this: Massive layoffs. At the end of 2016, GoPro had 1,552 employees. At the end of 2017: 1,273 employees. Woodman said Wednesday that the company currently employs 841 workers.

Wall Street’s reaction to the positive comments was a bit muted and its shares even fell briefly during the conference call, only to bounce back a bit and end the extended trading session with a 2.1% gain. The stock is on a roll so far this year, up 21.5% since January, when Woodman told MarketWatch that there was no boogeyman in the fourth quarter.

GoPro is still a niche electronics company, but at least Woodman now realizes GoPro is at its best by focusing on its core users and offering them services, like low-cost cloud storage of their photos, rather than trying to greatly expand the reach of their products, which have a core audience of extreme-sports enthusiasts.

The company said that it expects 2019 revenue to grow at a rate of about 5% to 8%, slightly higher than Wall Street was expecting, and a break with recent past declines. According to FactSet, consensus for 2019 revenue is growth of about 4% to $1.2 billion. That compares with three years of declining or flat revenue: a drop of 2.7% in 2018, down 0.5% in 2017 and a drop of 26.8% in 2016.

Executives expect revenue to grow because of a strong reception to its higher-end Hero7 Black action camera, as well as the new avenues to recurring revenue.

“We expect our mix of cameras to continue to shift to the high end, and as a result we expect ASPs to increase and we expect to grow our GoPro Plus subscription service to our enhanced offering and expanded marketing efforts,” Chief Financial Officer Brian McGee said in the call. “We expect revenue to grow each quarter on a year-over-year basis.”

GoPro seems to have accepted its fate as a smaller, niche-market player in consumer electronics, a brutally difficult business, especially for hardware companies. The company appears to be looking, like Apple Inc., to services such as cloud storage for growth — GoPro Plus has over 200,000 subscribers, and more features being added.

But GoPro is now a slow-growth company that is winning through cutbacks and expense controls. If its single-digit revenue growth does not pan out as it hopes, it has few levers left to pull. In this cutthroat industry, where GoPro’s rivals include smartphone cameras, investors can never get too hopeful or complacent about turnarounds, as a niche business can become quickly obsolete.

China's GoPro rival plans IPO in 2020 after raising fresh round of funding

Insta360, a Chinese firm that sells cameras able to film 360-degree video, said on Wednesday it had raised $30 million in funding and its CEO told CNBC the company is planning to go public in 2020.

"We plan on an IPO in 2020 and take on new investments from the public market so we can more aggressively innovate and change the camera industry," JK Liu, CEO of Insta360 told CNBC in an interview through a translator.

Insta360 sells cameras that can plug into smartphones and record 360-degree video. Users can edit videos on their smartphones. Beyond that, the company has also recently expanded its products into so-called action cameras — standalone hardware designed to capture fast-moving sports or activities.

That has thrust it into deeper competition with U.S. firm GoPro.

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Liu said part of the funding would be used for research and development with a particular focus on bringing more advanced artificial intelligence (AI) capabilities to its software and hardware.

Liu said the company would launch a new hardware and software product this year but declined to reveal further details.

Currently, Insta360 sells its products in various retail stores — including Apple's — and online. Part of the funding, Liu said, will be used to build branded stores for the company in the U.S., the U.K., Germany, Japan and across major cities in China. Those will begin opening this year, he said.

Liu claimed Insta360 has been profitable since 2017 and has had a compound annual growth rate (CAGR) in terms of revenue of 130 percent between 2016 and 2018. CAGR is essentially an average growth rate over those years. Heavy investment can often dent profitability, but Liu said the company would remain in the black even if some of its bets were to sour.

GoPro Inc. GPRO, -3.59% said Monday it will begin production in Mexico of U.S.-bound cameras in June, with sales beginning in the third quarter. The announcement comes after the action-camera maker said in December that it was moving production of all U.S.-bound cameras out of China to avoid potential tariffs. The company said it will maintain production of non-U.S. bound cameras in China. "As stated previously, our decision to move most of our U.S. bound production to Mexico supports our goal to insulate us against possible tariffs as well as recognize some cost savings and efficiencies," said GoPro Chief Financial Officer Brian McGee. GoPro's stock was unchanged in morning trade. It has run up 51.2% year to date, while the S&P 500 SPX, +0.21% has gained 12.5%

Statement from the President Regarding Emergency Measures to Address the Border Crisis

May 30, 2019

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To address the emergency at the Southern Border, I am invoking the authorities granted to me by the International Emergency Economic Powers Act. Accordingly, starting on June 10, 2019, the United States will impose a 5 percent Tariff on all goods imported from Mexico. If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed. If the crisis persists, however, the Tariffs will be raised to 10 percent on July 1, 2019. Similarly, if Mexico still has not taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States, Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019. Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory. Workers who come to our country through the legal admissions process, including those working on farms, ranches, and in other businesses, will be allowed easy passage.

If Mexico fails to act, Tariffs will remain at the high level, and companies located in Mexico may start moving back to the United States to make their products and goods. Companies that relocate to the United States will not pay the Tariffs or be affected in any way.

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GoPro cuts second-half outlook citing Hero8 shipment issues

October 2, 2019

(Reuters) - GoPro Inc (GPRO.O) on Wednesday cut its revenue and profit forecasts for the rest of the year, hit by a delay in production of its latest Hero8 Black cameras, triggering a 19% drop in its shares.

The company, which launched two new cameras including a ramped up version of its “HERO” line on Tuesday, said it would ship the cameras in the fourth quarter instead of the third quarter as planned earlier.

The action camera maker said there was a “late stage production delay” that would lead to a fall in revenue, but did not provide any details.

The company forecast annual growth of 6% to 9%, well below its previous estimated rise of 9% to 12%.

It now expects to post an adjusted profit of between 33 cents and 39 cents per share for the second half of the year, compared with its prior forecast of 37 cents to 49 cents.

The company trimmed its 2019 revenue forecast to between $1.22 billion and $1.25 billion, from a prior forecast of $1.25 billion to $1.28 billion.