After a challenging H1, GoPro promises to operate as a profitable business in 2025 through severe operating cost reductions and a continuation of its diversification strategy. Part of that effort will focus on broadening the struggling action camera company’s product portfolio.
There were some highlights in Q2 despite disappointing numbers. Total revenue declined by 23 percent to $186.2 million from $241.0 million but was 9 percent above mid-point guidance due to higher demand for the Hero12 Black camera in Europe and North America. Period sales in EMEA fell by 1 percent, better than year-over-year declines in Asia-Pacific (-19%) and Americas (-8%).
However, the Q2 operating loss widened to $46.5 million from a loss of $22.5 million, and the gross margin slipped by 90 basis points to 30.7 percent. The net loss was $47.8 million versus $17.2 million in the year-ago period. Inventory at Q2 end was down by 28 percent year-over-year to $97 million.
Retail sales fell by 17 percent to $137 million as sell-through declined by 9 percent to slightly above 600,000 units. But there was an upside in the Q2 results. Subscription and service revenues expanded by 8 percent to $26 million. Subscribers grew 4 percent year-over-year to 2.53 million, including 33,000 Premium+ users. During the period, the group added 800 retail locations across all geographic regions, with the biggest increases in Europe and through an expansion into Latin America.
GoPro, citing numerous impacts, including delayed product launches and muted consumer spending on full-price items, is currently forecasting a 13 to 15 percent drop in FY24 revenues to $850 to $870 million from unit sales of 2.6 to 2.7 million. Additionally, the group is anticipating a $100 million sales impact from the delayed launch of a new 360-degree camera until sometime in 2025. The annual FY24 operating loss is estimated to be approximately $75 million.
Regarding cost-cutting, the group is committed to lowering its 2025 operating expenses by approximately $320 million. Part of the effort will be $20 million in cuts from reductions in non-recurring technology expenses. But there will also be unspecified reductions to marketing and salaries, likely through a headcount reduction.
