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When Will GoPro Report Profitability?

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Net loss in the first quarter

GoPro’s (GPRO) revenue fell 7.5% YoY (year-over-year) in the first quarter to $202.3 million. The company’s gross margin contracted from 32.3% in the first quarter of 2017 to 24.3% in the first quarter of 2018 driven by product mix.

GoPro managed to reduce its operating expenses by 28.5% to offset its declining sales, but it still reported an operating loss of $44.5 million in the first quarter.

GoPro’s net income was -$47.4 million in the first quarter, and it saw non-GAAP (generally accepted accounting principles) EPS of -$0.34. The company also reduced its employee headcount to 1,020 in the first quarter of 2018 compared to 1,273 in the fourth quarter of 2017.

Bottom line expected to improve in 2018 and 2019

GoPro expects its gross margin to be in the upper 20% range in the second quarter, and this figure is expected to rise above 30% by the end of the fourth quarter following the introduction of new high-margin products. Analysts expect GoPro’s revenue to fall almost 9% YoY to $270.2 million in the second quarter and 20% YoY to $263.2 million in the third quarter.

In 2018, GoPro’s revenue is expected to fall 4.4% to $1.13 billion. Its revenue is, however, expected to rise 3% YoY to $1.16 billion in 2019. Analysts expect GoPro’s EPS to improve to -$0.32 in 2018 from -$0.69 in 2017. The company is also expected to post EPS of $0.01 in 2019.

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