GoPro (GPRO) Q4 Earnings Top Estimates On Revenue Growth

GoPro, Inc. (NASDAQ:GPRO) reported better-than-expected fourth-quarter 2018 results, wherein both the top line and the bottom line beat the respective Zacks Consensus Estimate.

The action video camera maker’s financial performance was mainly driven by strong demand for HERO7 cameras, particularly its flagship HERO7 Black camera. Lower operating expenses and inventory management also remained tailwinds.

Net Income

On a GAAP basis, net income for the reported quarter was $31.7 million or 22 cents per share against net loss of $55.8 million or loss of 41 cents per share in the year-ago quarter. The year-over-year improvement was primarily due to top-line growth and lower operating expenses. The performance was driven by strong product line-up and efficient execution of operational plans. For full-year 2018, net loss was $109 million or loss of 78 cents per share compared with loss of $182.9 million or loss of $1.32 per share a year ago.

Quarterly non-GAAP net income came in at $42.4 million or 30 cents per share against net loss of $41.3 million or loss of 30 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 4 cents.

GoPro, Inc. Price, Consensus and EPS Surprise

Revenues

The company generated quarterly revenues of $377.4 million, up 12.7% year over year. Notably, GoPro increased both camera unit sell-through and market share in 2018. The top line surpassed the consensus estimate of $376 million. For full-year 2018, revenues decreased 2.7% year over year to $1,148.3 million.

Other Quarterly Details

Non-GAAP gross margin improved to 38.4% from 24.8% in the year-ago quarter, up 1,360 basis points. Non-GAAP operating income was $46 million against loss of $37.4 million. Adjusted EBITDA was $58.8 million against a negative $26.5 million in the prior-year quarter.

Cash Flow and Liquidity

During full-year 2018, GoPro utilized $40 million of cash in operating activities compared with cash utilization of $36.9 million in 2017.

As of Dec 31, 2018, the company had $152.1 million of cash and cash equivalents with $139 million of long-term debt compared with the respective tallies of $202.5 million and $130 million a year ago.

Going Forward

GoPro expects to translate the healthy momentum in its business along with controlled cost into growth and profitability in 2019 while limiting operating expenses below $400 million. The company is optimistic about its prospects, mainly on account of strong demand for its products in end markets. It plans to enhance its Plus subscription service through enhanced benefits and user awareness and aims to work more closely with its retail partners, both in North America and abroad. GoPro is also making investments in merchandising and retail advertising to drive a bigger brand presence while continuing to innovate. It intends to expand footprint in emerging markets like India and remains focused on scaling its CRM efforts to augment customer base.

Zacks Rank & Stocks to Consider

GoPro currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader industry include Sony Corporation (NYSE:SNE) , Digi International Inc. (NASDAQ:DGII) and Comtech Telecommunications Corp. (NASDAQ:CMTL) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sony has a long-term earnings growth expectation of 8.1%.

Digi International has a long-term earnings growth expectation of 14.5%.

Comtech has a long-term earnings growth expectation of 5%.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>