New market strategies began to take hold in Q2 as revenues for the period clicked 9.5 percent higher, above expectations, to $241 million. Nonetheless, GoPro reported an operating loss of $22.5 million against an operating profit of $4.7 million for the period ended June 30. Gross margin came in at 31.6 percent, some 190 basis points below a target of 33.5 percent, due in part to sales growth of the entry-level price point camera that accounted for 25 percent of all camera revenues and exceeded company projections by 50 percent. Subscription and service revenues increased 21 percent year-over-year to $24 million as GoPro’s subscriber base grew 27 percent to 2.44 million.
Camera demand, measured by sell-through, fell 4 percent year-over-year to 660,000 to 680,000 units. Sell-throughs by geography showed an 8 percent decline in Europe, a 10 percent drop in the Americas and a 13 percent increase in the Asia-Pacific region.
Brian McGee, EVP, CFO and COO, said the Q2 results reflected positive signals that the company’s go-to-marketing strategy is working. Key elements of that plan, discussed in May, included re-introducing entry-level price point cameras, restoring camera pricing to lower pre-pandemic price points and scaling marketing spending to pre-pandemic levels over time. The group has a new entry-level camera with an improved margin planned for introduction in H2/24. Had this product been available in Q2, the period’s margin rate would have been almost 300 basis points higher.
GoPro’s current FY23 outlook calls for total revenues of approximately $1.03 billion, down 6 percent year-over-year, three million units sold, down from 3.2 million in 2022, and a gross margin rate of 33.0 percent. Key H2 priorities for the company include generating cash and returning to profitability, buying back $40 to $70 million of its stock, and growing its subscription and service revenue to the $100 million mark.
