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01/11 03:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite some positive financial metrics, such as improved gross margins and reduced operating expenses, GoPro faces significant challenges. The expected revenue decline, increased tariff costs, and competition from China-based rivals present substantial risks. The Q&A reveals vague responses on consumer demand and competition, indicating uncertainties. The guidance for Q2 2025 shows a revenue decline and a net loss, which are likely to negatively impact the stock price. Given these factors, the sentiment is negative, with a potential stock price decrease between -2% to -8%.
Revenue $153 million in Q2 2025, a 6% increase from the midpoint of guidance ($145 million).
Gross Margin 36% in Q2 2025, up from 30.7% in Q2 2024, an improvement of over 500 basis points due to less price discounting and an increase in subscription and service revenue as a percentage of total revenue, partially offset by tariff costs.
Non-GAAP Operating Expenses $63 million in Q2 2025, a 32% reduction year-over-year from $93 million in Q2 2024. The decrease was driven by reduced advertising and marketing activities, restructuring actions, and completion of the GP3 system on-chip.
Adjusted EBITDA Negative $6 million in Q2 2025, an 83% improvement or $28 million year-over-year from negative $33 million in Q2 2024.
Non-GAAP EPS Net Loss Per Share Negative $0.08 in Q2 2025, improved from negative $0.24 in Q2 2024.
Cash Flow from Operations $9 million in Q2 2025, an improvement of $8 million year-over-year from $1 million in Q2 2024.
Inventory $84 million at the end of Q2 2025, a 12% sequential decrease and a 30% decrease since Q4 2024.
Sell-through Units Approximately 500,000 units in Q2 2025, down from 600,000 units in Q2 2024.
Subscription and Service Revenue Flat year-over-year at $26 million in Q2 2025.
Subscription Attach Rate 56% in Q2 2025, up from 45% in Q2 2024, a 24% improvement.
Average Selling Price (ASP) $374 in Q2 2025, a 16% improvement year-over-year.
HERO13 Black Ultra Wide Edition: Launched as a special edition of the HERO13 Black camera with an ultra-wide lens mod pre-installed, enabling low distortion and wide-angle 177-degree perspectives.
Limited-edition Forest Green HERO13 Black: Introduced a nature-inspired aesthetic targeting outdoor enthusiasts.
Software Enhancements: Added 360 editing tools like MotionFrame and POV to the GoPro App, enhancing user experience and laying groundwork for the Max 2 360 camera launch.
Max 2 360 Camera: Planned for launch later in 2025, targeting the 360 camera market.
AI Data Licensing Program: Launched a program allowing U.S. subscribers to monetize their cloud-based video content for AI model training, with subscribers earning 50% of license revenue.
360 Camera Market: Targeting a 2 million unit annual market with the upcoming Max 2 360 camera.
Low Light Camera Market: Exploring entry into a $2-$2.5 million unit annual market.
Motorcycle Helmet Innovation: Developing tech-enabled motorcycle helmets in partnership with AGV, targeting a $3 billion SAM.
Operating Expense Reduction: Reduced operating expenses by 32% year-over-year in Q2 2025.
Gross Margin Improvement: Achieved a gross margin of 36%, up from 30.7% in Q2 2024.
Inventory Management: Reduced inventory by 30% since Q4 2024.
Supply Chain Diversification: Exploring production outside China to mitigate tariff impacts.
Board of Directors Refresh: Added three seasoned executives to the board, bringing expertise in financial governance, marketing, and global manufacturing.
IP Protection: Won an initial determination against Insta360 for patent infringement, with potential exclusion orders expected in January 2026.
Capital Raise: Secured $50 million in debt financing to bolster the balance sheet and prepare for $94 million convertible debt repayment in November 2025.
Tariff Costs: The company expects the impact of tariffs on cameras and accessories in 2025 to be approximately $18 million, up from $8 million in 2024 due to an increase in tariff rates from 10% to 20%. This poses a significant cost challenge, partially offset by modest product price increases.
Convertible Debt Repayment: GoPro is preparing to repay approximately $94 million in convertible debt due in November 2025. This could strain liquidity despite a recent $50 million debt financing.
Revenue Decline in Q3 2025: Revenue for Q3 2025 is expected to decline by 38% year-over-year, with unit sell-through down 25%. This indicates potential challenges in market demand and sales performance.
Supply Chain Diversification: The company is working to diversify its supply chain outside of China to mitigate risks associated with tariffs and geopolitical uncertainties. However, this transition may involve additional costs and operational complexities.
Competition and IP Protection: GoPro faces competition from China-based competitors like Insta360, which has led to legal disputes over patent infringement. While initial rulings are in GoPro's favor, the case is ongoing and could impact market dynamics.
Economic Uncertainty: Global economic uncertainty and consumer confidence volatility are highlighted as risks that could impact revenue and operational performance.
Inventory Management: Inventory levels have decreased, but sell-through was approximately 500,000 units in Q2 2025, down from 600,000 units in the prior year. This indicates potential challenges in demand forecasting and inventory turnover.
Subscription Revenue Stagnation: Subscription and service revenue was flat year-over-year at $26 million, which may indicate challenges in growing this revenue stream despite increased subscription attach rates.
Revenue Growth: GoPro expects to resume revenue growth in Q4 2025 and projects second-half 2025 revenue of approximately $390 million, plus or minus $20 million. For Q3 2025, revenue is expected to be $160 million, plus or minus $10 million.
Adjusted EBITDA: The company anticipates adjusted EBITDA of approximately $20 million in the second half of 2025, compared to a prior-year loss of $9 million. Adjusted EBITDA for Q3 2025 is expected to be breakeven.
Gross Margin: Gross margin for Q3 2025 is expected to be 35.5% at the midpoint of guidance, flat versus the prior year quarter.
Operating Expenses: Full-year 2025 operating expenses are expected to remain in the range of $240 million to $250 million, down more than $100 million or 30% year-over-year. Q3 2025 operating expenses are expected to be $60 million, plus or minus $1 million.
Product Launches: GoPro plans to introduce two new cameras, including the Max 2 360 camera, in the second half of 2025. The company also plans to expand its product suite throughout 2026.
Subscription Growth: GoPro expects to end 2025 with 2.4 million subscribers, supported by ongoing software enhancements and increased camera sales.
Market Expansion: The company aims to grow into new markets, including the 360 camera segment (estimated at 2 million units annually) and the low-light capable camera segment (estimated at 2-2.5 million units annually).
Tariff Impact: Tariff costs on cameras and accessories in 2025 are expected to be approximately $18 million, up from $8 million in 2024. The company plans to offset approximately 50% of the tariff impact through modest product price increases and supply chain diversification.
Liquidity Position: GoPro expects to end 2025 with approximately $80 million in cash and an additional $50 million available under its ABL facility, reflecting the repayment of $94 million in convertible debt in November 2025.
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The earnings call presents mixed signals. While there are positives like revenue growth, reduced operating expenses, and an optimistic 2026 outlook, there are concerns about tariff impacts, declining gross margins, and sell-through challenges. The Q&A reveals strategic decisions for future growth but lacks specific data, causing uncertainty. The absence of a new flagship product in Q4 2025 and competitive pressures add to the neutral sentiment. Overall, the near-term outlook is stable, but uncertainties prevent a strong positive or negative stance.
Despite some positive financial metrics, such as improved gross margins and reduced operating expenses, GoPro faces significant challenges. The expected revenue decline, increased tariff costs, and competition from China-based rivals present substantial risks. The Q&A reveals vague responses on consumer demand and competition, indicating uncertainties. The guidance for Q2 2025 shows a revenue decline and a net loss, which are likely to negatively impact the stock price. Given these factors, the sentiment is negative, with a potential stock price decrease between -2% to -8%.
The earnings call reveals several negative factors: a significant revenue guidance decline (22% YoY), ongoing competitive pressures, and macroeconomic challenges in Asia. Despite some positive aspects, like reduced operating expenses and increased gross margins, these are overshadowed by the EPS miss, legal issues, and lack of a share repurchase program. The Q&A section highlights management's vague responses and challenges in Asia. These factors, combined with the absence of a market cap for precise impact assessment, suggest a negative sentiment, predicting a stock price decline between -2% to -8%.
The earnings call presents a mixed outlook. While there are positives like proactive supply chain management and a share repurchase program, the EPS miss and vague guidance for 2025 introduce uncertainty. The Q&A further highlights concerns about declining subscribers and competition, with management avoiding precise revenue guidance. These factors balance each other out, leading to a neutral sentiment.
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