GoPro points to increased costs as it reports deeper losses in financial results
Despite the ubiquity of GoPro's diminutive 'action cam' video cameras, the company has reported a loss of $19.8 million for the second quarter following an additional loss of $5.1 million from the year prior. GoPro first went public in June of this year, and while shares have dropped a whopping 11-15% following the financial results, everything is not necessarily doom and gloom for the company.
Second-quarter earnings of 8 cents a share actually exceeded analysts' expectations of 7 cents a share while, similarly, the company explains that the losses themselves were largely due to regulatory costs and inflated expectations from going public as well as research and development. Sales actually rose by more than 30%, beating analysts' expectations of $238.1 million by $6.5 million in data compiled by Bloomberg. The IPO started shares at $24 while currently averaging roughly $40 a share in comparison to a high of nearly $49 in early July. Aside from the financial results, GoPro continues a massive lead in the niche action cam segment. Thanks to its immense popularity with athletes and outdoor enthusiasts of all kinds, the company's YouTube channel alone sports more than 2 million subscribers.
Still, as video technology becomes easier and cheaper to produce, GoPro is facing stiff competition from imaging companies like Drift, JVC, Panasonic, Sony and many more. It's not too surprising that the company would chalk many of the losses to R&D as it attempts to leverage crowded hardware sales into a more diversified media empire. Such avenues for expansion include company-generated original video productions, copious advertising and retail partnerships, worldwide expansion, software licensing and sales of mounts and peripherals.
For example, GoPro recently announced a new channel for the Microsoft Xbox One game console, while dropping hints of more to come on streaming devices like the Apple TV and Roku formats. Equally, the company pointed out that the number of GoPro-related videos published and viewed on YouTube has more than doubled during the same timeframe. It expects to report much stronger second-half results.
William Davis is a contributing writer for DPReview.