GoPro Inc. surprised investors with higher sales than analysts expected, showing that a cost-cutting plan is starting to stem the action camera maker’s decline. After a long fall from grace as one of Wall Street’s tech darlings less than three years ago, GoPro has struggled to show it can move beyond its small, wearable cameras and return to growth, and eventually turn a profit.
Last year threw up many hurdles, from product delays to recalls and disappointing earnings, forcing Chief Executive Officer Nick Woodman to eliminate hundreds of jobs and abandon an entertainment division. Those efforts to turn around the once-bloated company are starting to show results.
GoPro reported $218.6 million in revenue for the quarter ended March 31, up 19 percent from a year earlier, and said second-quarter revenue should be $260 million to $280 million, surpassing analysts’ average projection. “We’re more focused, doing fewer things better, and that’s starting to pay off in expectations and results,” Chief Operating Officer CJ Prober said in an interview. “The flatter organization is leading to better collaboration, more transparency, and better decision-making.”
The company had a loss, excluding some costs, of $62.8 million, or 44 cents a share, in line with analysts’ estimates. Prober said sales of the Karma drone, which the company was forced to recall in November, are beating internal company projections. Another driver of revenue growth was international sales, which accounted for 60 percent of the total, the highest ever.
After the company’s restructuring, Prober is betting GoPro can avoid last year’s missteps. But it still faces significant headwinds, including competition in the drone market from DJI, the Chinese company that’s the market leader, and broadening its saturated user base from hardcore adventure seekers to a more mainstream audience.
GoPro rolled out a trade-up program last month to entice former customers back to the brand. Thousands of people have participated, Prober said. Like Fitbit, GoPro has to defend itself from being relegated to the junk drawer after consumers use the gadgets only a few times. Prober is betting that it can bring back former GoPro users with the newer cameras that have better software and simpler interfaces.