GoPro (NASDAQ:GPRO) Reports Bullish Q1, Stock Soars

Adam Hejl /
2024/05/07 4:45 pm EDT

Action camera company GoPro (NASDAQ:GPRO) announced better-than-expected results in Q1 CY2024, with revenue down 11% year on year to $155.5 million. It made a non-GAAP loss of $0.21 per share, down from its loss of $0.19 per share in the same quarter last year.

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GoPro (GPRO) Q1 CY2024 Highlights:

  • Revenue: $155.5 million vs analyst estimates of $146.5 million (6.1% beat)
  • Adjusted EBITDA: ($29.3) million loss vs analyst estimates of ($38.9) million loss (large beat)
  • EPS (non-GAAP): -$0.21 vs analyst estimates of -$0.25 ($0.04 beat)
  • Gross Margin (GAAP): 34.1%, up from 30% in the same quarter last year
  • Free Cash Flow was -$99.37 million, down from $43.19 million in the previous quarter
  • Market Capitalization: $290.9 million

"GoPro exceeded our revenue target in Q1, and we are making progress on our multi-year TAM expansion strategy, but it is taking more time than we anticipated," said Nicholas Woodman, GoPro's founder and CEO.

Known for sponsoring extreme athletes, GoPro (NASDAQ:GPRO) is a camera company known for its POV videos and editing software.

Toys and Electronics

The toys and electronics industry presents both opportunities and challenges for investors. Established companies often enjoy strong brand recognition and customer loyalty while smaller players can carve out a niche if they develop a viral, hit new product. The downside, however, is that success can be short-lived because the industry is very competitive: the barriers to entry for developing a new toy are low, which can lead to pricing pressures and reduced profit margins, and the rapid pace of technological advancements necessitates continuous product updates, increasing research and development costs, and shortening product life cycles for electronics companies. Furthermore, these players must navigate various regulatory requirements, especially regarding product safety, which can pose operational challenges and potential legal risks.

Sales Growth

A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one may grow for years. GoPro's revenue declined over the last five years, dropping 3.7% annually. GoPro Total RevenueWithin consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. GoPro's recent history shows its demand has decreased even further as its revenue has shown annualized declines of 8.4% over the last two years.

This quarter, GoPro's revenue fell 11% year on year to $155.5 million but beat Wall Street's estimates by 6.1%. Looking ahead, Wall Street expects sales to grow 5.2% over the next 12 months, an acceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, GoPro's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 2.8%.

GoPro Free Cash Flow Margin

GoPro burned through $99.37 million of cash in Q1, equivalent to a negative 63.9% margin, reducing its cash burn by 47% year on year.

Key Takeaways from GoPro's Q1 Results

We were impressed by how significantly GoPro blew past analysts' revenue and adjusted EBITDA expectations this quarter. Zooming out, we think this was a good quarter that should have shareholders cheering. The stock is up 6.3% after reporting and currently trades at $1.95 per share.

GoPro may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.