GPRO Q1 Earnings Call: Revenue Miss and Strategic Focus on Product Roadmap, Supply Chain, and Cost Controls

Yahoo

2 days ago

Action camera company GoPro (NASDAQ:GPRO) missed Wall Street's revenue expectations in Q1 CY2025, with sales falling 13.6% year on year to $134.3 million. Its non-GAAP loss of $0.12 per share was in line with analysts' consensus estimates.
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Revenue: $134.3 million (13.6% year-on-year decline)
Adjusted EPS: -$0.12 vs analyst estimates of -$0.12 (in line)
Adjusted Operating Income: -$18.66 million vs analyst estimates of -$18.51 million (-13.9% margin, 0.8% miss)
Operating Margin: -33.7%, down from -26.6% in the same quarter last year
Cameras Sold: 385,000, down 8,000 year on year
Market Capitalization: $104.8 million
GoPro's first quarter results reflected ongoing challenges in core camera sales and regional demand, with management attributing performance to both competitive pressures and shifting consumer behavior, particularly in Asia. CEO Nicholas Woodman highlighted the launch of new hardware and software, such as the updated 360-degree camera app and a refreshed MAX camera, as steps aimed at revitalizing GoPro's position. CFO Brian McGee noted that sell-through was strongest in the U.S. market, while Asia-Pacific experienced notable declines due to macroeconomic factors and heightened local competition. Management also pointed to a one-time sale of slower-moving inventory, which affected gross margin but helped optimize working capital. The quarter saw continued improvement in subscription retention and operating expense reductions, as GoPro pursues a leaner operating model.
Looking forward, GoPro's management is focused on regaining growth through new product launches, continued supply chain diversification, and operating expense discipline. The upcoming introduction of the MAX2 360-camera and expansion into tech-enabled motorcycle helmets, through a partnership with AGV, are central to GoPro's growth strategy. Management expects ongoing cost reductions and modest price increases to offset tariffs, with CFO Brian McGee stating tariff impacts on cameras are now minimal due to diversified production. Subscription revenue is projected to benefit from new features and higher retention, but management remains cautious about macroeconomic uncertainty and competitive threats, particularly in Asia. Woodman emphasized the importance of balancing innovation with financial discipline to restore profitability and drive long-term value.
Management attributed quarterly results to operational streamlining, new product introductions, and ongoing supply chain diversification, while also highlighting regional demand headwinds and competitive dynamics, especially in Asian markets.
Supply chain diversification progress: GoPro shifted camera manufacturing outside China, reducing exposure to import tariffs in the U.S. This transition, along with modest global price increases, is expected to largely offset remaining tariff-related costs on both cameras and accessories.
Subscription business momentum: The GoPro subscription service continued to show high retention, with aggregate rates reaching a record 70%. Management attributed subscription ARPU (average revenue per user) growth to new features and improved user engagement, positioning subscriptions as a recurring revenue stream.
New product launches and roadmap: Several new products debuted in the quarter, including a refreshed MAX camera, a limited-edition HERO13 Black, and an Anamorphic Lens Mod for cinematic video capture. Further, the launch of the MAX2 360-camera and tech-enabled motorcycle helmets are planned for later in the year.
Operating expense reduction: Non-GAAP operating expenses declined significantly year-over-year, as restructuring efforts, lower headcount, and reduced marketing spend took effect. Management noted that cost control is expected to drive further margin improvement through 2025.
Regional demand challenges: The Asia-Pacific region, especially China, Japan, and South Korea, experienced sharp declines in sell-through due to macroeconomic pressures, increased competition, and a growing trend toward local brands. The U.S. market performed comparatively better, though total units sold declined.
GoPro's outlook is shaped by upcoming product launches, disciplined expense management, and ongoing efforts to adapt to macroeconomic and competitive pressures.
Product pipeline as key growth lever: Management is counting on the introduction of the MAX2 360-camera and expansion into the motorcycle helmet market to expand GoPro's addressable market. The AGV partnership is intended to help GoPro establish a presence in the premium helmet segment.
Margin expansion from cost actions: Continued reductions in operating expenses and improvements in supply chain efficiency are expected to support margin recovery. Management believes these actions, alongside modest price adjustments, will help offset tariff and input cost headwinds.
Uncertainty in international markets: Macroeconomic weakness and intensified competition in Asia remain risks. Management acknowledged slower demand and highlighted that brand loyalty in China has shifted toward domestic offerings, which could limit near-term growth opportunity in the region.
In the next few quarters, the StockStory team will watch (1) the launch and market reception of the MAX2 360-camera and progress on the AGV motorcycle helmet collaboration, (2) whether GoPro can sustain subscription growth and higher retention as new features roll out, and (3) the company's ability to further reduce operating expenses and improve margin resilience. Continued monitoring of Asian demand trends and effectiveness of supply chain adaptations will also be critical.
GoPro currently trades at a forward P/E ratio of 10.2×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it's free).
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