GoPro has strong guidance for the current quarter
Drones didn’t work for GoPro (GPRO), and the company didn’t waste time exiting the business of making consumer drones to allow it to focus its resources and energies on strengthening its core business of building action cameras.
GoPro quit the drone business in January, and in May it reported its first-quarter results, which showed that its revenue had exceeded Wall Street’s expectations by nearly $20 million and that its net loss had narrowed sharply from a year earlier.
On top of posting strong first-quarter results, GoPro also put out strong guidance for its current quarter. The company is targeting second-quarter revenue of between $260 million and $280 million, above the average estimate of $239.7 million.
Marketing and selling at the right price worked for GoPro
What’s behind GoPro’s upbeat guidance? A combination of right product pricing, aggressive marketing, and generous discounts led to GoPro reporting better-than-expected results in the first quarter, and these same factors are behind the company’s upbeat guidance for the second quarter.
In an interview on CNBC last month, GoPro CEO Nick Woodman suggested that the company doesn’t have to expand into other digital imaging markets, such as producing security cameras, to drive camera sales. According to Woodman, the action camera segment in which GoPro has already built a strong brand for itself remains a huge revenue opportunity at roughly $2.0 billion per year.
Revenue dipped 7.4%
GoPro generated revenue of $202.4 million in the first quarter, down 7.4% year-over-year but above the $184.2 million revenue Wall Street had been expecting.
The company’s net loss narrowed to $76.3 million in the first quarter from $111.2 million a year earlier. Snap (SNAP), the Facebook (FB) and Twitter (TWTR) competitor that prefers to refer to itself as a camera company, posted a $385.8 million loss in the first quarter. Canon (CAJ) posted a profit of ~$521 million in the first quarter.