GoPro, Inc. (GPRO) Bundle
Understanding GoPro, Inc. (GPRO) Revenue Streams
Understanding GoPro, Inc.’s Revenue Streams
The total revenue for the third quarter of 2024 was $258.9 million, reflecting a 12.0% decrease from $294.3 million in the same period in 2023. For the first nine months of 2024, revenue totaled $600.6 million, down 15.4% from $710.0 million in 2023.
Breakdown of Primary Revenue Sources
The revenue composition for the third quarter of 2024 was as follows:
| Revenue Source | Q3 2024 ($ million) | Q3 2023 ($ million) | % Change |
|---|---|---|---|
| Retail Revenue | $207.9 | $230.9 | -10% |
| GoPro.com (including subscription and service) | $51.0 | $63.3 | -19% |
| Total Revenue | $258.9 | $294.3 | -12% |
Year-over-Year Revenue Growth Rate
Year-over-year growth rates for key periods are as follows:
| Period | Total Revenue ($ million) | Growth Rate |
|---|---|---|
| Q3 2024 | $258.9 | -12.0% |
| Q3 2023 | $294.3 | |
| First 9 Months 2024 | $600.6 | -15.4% |
| First 9 Months 2023 | $710.0 |
Contribution of Different Business Segments to Overall Revenue
For the first nine months of 2024, the contribution of different regions to total revenue was:
| Region | Revenue ($ million) | % of Total Revenue |
|---|---|---|
| Americas | $274.6 | 45.7% |
| Europe, Middle East, and Africa (EMEA) | $200.9 | 33.5% |
| Asia and Pacific (APAC) | $125.0 | 20.8% |
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams for 2024 include:
- Retail revenue represented 80.3% of total revenue in Q3 2024, compared to 78.5% in Q3 2023.
- GoPro.com revenue represented 19.7% of total revenue in Q3 2024, down from 21.5% in Q3 2023.
- Subscription and service revenue increased 10.6% year-over-year in Q3 2024, totaling $27.5 million.
The average selling price for cameras decreased to $294 in Q3 2024, down 7.8% from $319 in Q3 2023, while total camera units shipped were 881,000, down 4.6% from 923,000 units in Q3 2023.
In summary, the overall revenue trends indicate challenges, particularly in retail and GoPro.com sales, impacted by strategic pricing adjustments and evolving market conditions.
A Deep Dive into GoPro, Inc. (GPRO) Profitability
A Deep Dive into GoPro, Inc.'s Profitability
Gross Profit Margin: For the first nine months of 2024, the gross profit margin was 33.6%, an increase from 31.3% during the same period in 2023. This represents a year-over-year improvement of 230 basis points.
Operating Profit Margin: The operating loss for the first nine months of 2024 was $(95.9 million), resulting in an operating margin of (16%), compared to (10%) in 2023.
Net Profit Margin: The net loss for the first nine months of 2024 was $(395.1 million), equating to a net profit margin of (66%), a significant decline from (7%) in the prior year.
Trends in Profitability Over Time
The following table summarizes the profitability metrics over the past two years:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Revenue ($ million) | $258.9 | $294.3 | $600.6 | $710.0 |
| Gross Profit Margin (%) | 35.5% | 32.0% | 33.6% | 31.3% |
| Operating Loss ($ million) | $(8.0) | $(3.8) | $(95.9) | $(66.1) |
| Net Loss ($ million) | $(8.2) | $(3.7) | $(395.1) | $(50.8) |
Comparison of Profitability Ratios with Industry Averages
In 2024, the gross margin of 33.6% is above the industry average of 30%. The operating margin of (16%) is below the industry average of (5%), indicating challenges in managing operating expenses. The net margin of (66%) is significantly lower than the industry average of (4%).
Analysis of Operational Efficiency
The total operating expenses for the first nine months of 2024 were $297.5 million, representing 50% of total revenue, compared to 41% in the same period of 2023. This increase reflects a rise in research and development expenses, which constituted 23% of revenue in 2024, compared to 17% in 2023.
Cost management has seen improvement with the gross margin increasing from 31.3% to 33.6% year-over-year, attributed to lower camera costs and operational efficiencies. The decrease in average selling price to $325 in 2024 from $340 in 2023 reflects a strategic pricing adjustment to boost unit sales.
Debt vs. Equity: How GoPro, Inc. (GPRO) Finances Its Growth
Debt vs. Equity: How GoPro, Inc. Finances Its Growth
As of September 30, 2024, GoPro, Inc. has total long-term debt of $93.8 million, following a repurchase of $50 million in convertible notes in November 2023. The company also holds short-term debt of $3.5 million.
The debt-to-equity ratio stands at 0.34, which indicates a conservative leverage position when compared to the industry average of approximately 0.5.
Debt Levels
The breakdown of GoPro's debt is as follows:
| Type of Debt | Amount (in millions) |
|---|---|
| Long-term Debt | $93.8 |
| Short-term Debt | $3.5 |
GoPro's total debt is manageable, especially given its strong cash position of $130.2 million as of the end of September 2024.
Debt Issuances and Credit Ratings
In November 2020, GoPro issued convertible notes totaling $143.8 million. The 2025 Notes mature on November 15, 2025. The company has maintained a credit rating that reflects moderate risk, allowing it to attract investors while balancing its debt obligations.
Balancing Debt Financing and Equity Funding
In terms of equity financing, GoPro has seen fluctuations in its stock price, impacting its ability to raise funds through equity. As of September 30, 2024, the company reported a net loss of $395.1 million for the first nine months of 2024, which has influenced management’s approach to financing.
The company continues to focus on operational efficiency and cost management while exploring opportunities to enhance its equity base through strategic partnerships and potential equity offerings. As of now, GoPro's strategy remains centered on leveraging its existing debt and improving cash flow to support growth initiatives.
Conclusion
The balance between debt and equity financing at GoPro indicates a cautious approach to growth, driven by market conditions and internal financial health metrics. Investors should monitor these factors closely as they assess the company's future performance.
Assessing GoPro, Inc. (GPRO) Liquidity
Assessing GoPro, Inc.'s Liquidity
Current and Quick Ratios (Liquidity Positions)
As of September 30, 2024, GoPro's current ratio stood at 1.12, indicating a relatively stable liquidity position. The quick ratio was calculated at 0.93, reflecting potential liquidity concerns as it falls below 1, suggesting that the company may have challenges in covering its short-term liabilities without selling inventory.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, showed a significant decrease. As of September 30, 2024, working capital was approximately $19.2 million, down from $44.5 million at the end of 2023. This decline raises concerns regarding the company's ability to finance its operations in the short term.
Cash Flow Statements Overview
The following table summarizes GoPro's cash flows for the nine months ended September 30, 2024, and 2023:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | % Change |
|---|---|---|---|
| Net cash used in operating activities | $(100,042) | $(76,592) | 31% |
| Net cash provided by investing activities | $8,069 | $107,437 | (92)% |
| Net cash used in financing activities | $(697) | $(33,270) | (98)% |
Operating activities resulted in a cash outflow of $100.0 million, primarily due to a net loss of $395.1 million and negative changes in working capital. In contrast, investing activities provided cash inflow of $8.1 million, mainly from maturities of marketable securities. Financing activities recorded a minor cash outflow of $0.7 million.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents were $130.2 million, a decrease from $222.7 million at the end of 2023. The company's cash, net of the outstanding principal balance of the 2025 Notes, was approximately $36.4 million. This indicates potential liquidity concerns, particularly given the significant net loss and reliance on cash flows from operations.
Additionally, the company holds $15.5 million in cash within foreign subsidiaries, which may not be readily available for operational needs in the U.S.
In summary, while GoPro maintains a reasonable level of cash reserves, its liquidity ratios and working capital trends suggest caution. The significant cash used in operating activities and the decrease in cash reserves highlight potential vulnerabilities in meeting short-term obligations.
Is GoPro, Inc. (GPRO) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of the company, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a critical metric for evaluating stock valuation. As of September 30, 2024, the P/E ratio stands at N/A due to a net loss reported for the last twelve months. The net loss for the third quarter of 2024 was $8.2 million, resulting in a diluted net loss per share of $0.05.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio can also be indicative of valuation. As of September 30, 2024, the book value per share is calculated as follows:
- Total stockholders' equity: $183.9 million
- Shares outstanding: 154.8 million
- Book value per share: $1.19
With a current stock price of approximately $1.16, the P/B ratio is approximately 0.97, indicating the stock is trading slightly below its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value (EV) is calculated as follows:
- Market capitalization: $179.5 million
- Total debt: $93.8 million (from convertible notes)
- Cash and equivalents: $130.2 million
- Enterprise Value (EV): $143.1 million
The EBITDA for the last twelve months is reported as $5.4 million for Q3 2024. Therefore, the EV/EBITDA ratio is approximately 26.5.
Stock Price Trends
Over the past 12 months, the stock price has experienced notable fluctuations:
- 12 months ago: $3.50
- 6 months ago: $2.00
- Current price: $1.16
This represents a 66.86% decline over the past year.
Dividend Yield and Payout Ratios
The company currently does not pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also 0% due to no earnings being distributed.
Analyst Consensus
As of the latest reports, the consensus among analysts is as follows:
- Buy: 3 analysts
- Hold: 5 analysts
- Sell: 2 analysts
The average target price set by analysts is approximately $2.50, suggesting a potential upside of 115% from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.97 |
| EV/EBITDA Ratio | 26.5 |
| Current Stock Price | $1.16 |
| 12-Month Stock Price Change | -66.86% |
| Dividend Yield | 0% |
| Analyst Consensus (Buy/Hold/Sell) | 3/5/2 |
| Average Analyst Target Price | $2.50 |
Key Risks Facing GoPro, Inc. (GPRO)
Key Risks Facing GoPro, Inc.
GoPro, Inc. faces several internal and external risks that significantly impact its financial health and market position. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The competitive landscape for GoPro is intensifying, particularly with the rise of alternative action camera brands and smartphone capabilities. The company reported a 15.4% decrease in revenue for the first nine months of 2024, totaling $600.6 million, compared to the same period in 2023. This decline is attributed to both increased competition and a strategic decision to lower the manufacturer's suggested retail prices (MSRPs) across its camera lineup.
Market Conditions
Macroeconomic factors, including inflation and recession fears, have resulted in a softer consumer market, particularly in the Americas and Asia-Pacific regions. For example, revenue from the Americas declined by 20% to $274.6 million in the first nine months of 2024. Additionally, the average selling price of cameras dropped by 4.5% year-over-year to $325.
Regulatory Changes
Ongoing changes in trade policies and tariffs can significantly affect GoPro's cost structure. The U.S. administration's potential imposition of tariffs on imports from China could impact production costs and pricing strategies. If tariffs are enacted, GoPro may face increased costs, which could necessitate raising prices and potentially losing customers.
Operational Risks
GoPro relies on contract manufacturers located primarily in China. This dependency exposes the company to risks associated with global supply chain disruptions, including increased security costs and potential export restrictions. The company reported that as of September 30, 2024, it had an accumulated deficit of $644.4 million, indicating ongoing financial challenges.
Financial Risks
GoPro's financial health is further challenged by its operating losses. The company recorded a net loss of $395.1 million for the nine months ended September 30, 2024. Moreover, the company's total operating expenses amounted to $297.5 million for the same period.
Mitigation Strategies
In response to these risks, GoPro is implementing several strategies. The company has initiated global reductions-in-force and restructuring actions aimed at lowering operating costs. For instance, total research and development expenses increased by 11% year-over-year, indicating a focus on innovation despite cost-cutting measures.
| Risk Factor | Current Status | Financial Impact |
|---|---|---|
| Revenue Decline | 15.4% decrease in first nine months of 2024 | $600.6 million |
| Average Selling Price | Decreased by 4.5% year-over-year | $325 |
| Net Loss | Net loss for nine months ended September 30, 2024 | $395.1 million |
| Accumulated Deficit | As of September 30, 2024 | $644.4 million |
Overall, GoPro's ability to navigate these risks will be crucial for its future financial performance and market position.
Future Growth Prospects for GoPro, Inc. (GPRO)
Growth Opportunities
Future growth prospects for the company are driven by several key factors, including product innovations, market expansions, and strategic initiatives.
Product Innovations
The company has been focusing on enhancing its product offerings. In 2024, it launched the Premium+ subscription, which includes features such as cloud storage up to 500 gigabytes of non-GoPro content and advanced video stabilization software. This initiative aims to increase user engagement and retention.
Market Expansions
Retail revenue for the third quarter of 2024 was $207.9 million, accounting for 80.3% of total revenue, compared to 78.5% in the same period of 2023. The company added over 6,300 new retail doors since Q3 2023, contributing to this growth.
Revenue Growth Projections
Revenue for the third quarter of 2024 was $258.9 million, a 12.0% decrease from the previous year. For the first nine months of 2024, total revenue was $600.6 million, representing a 15.4% decline from the same period in 2023.
Earnings Estimates
The average selling price decreased 7.8% year-over-year to $294 in Q3 2024. The subscription and service revenue, however, increased by 10.6% during the same period.
Strategic Initiatives
In 2024, the company undertook a restructuring plan aiming to reduce operating costs by approximately 26% of its global workforce. This is expected to streamline operations and improve financial performance in the long term.
Competitive Advantages
The company has a strong brand presence and a loyal customer base, with a subscription attach rate of 45% for camera purchases. The aggregate retention rate for annual subscribers improved to 67% in Q3 2024, up from 65% in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Total Revenue | $258.9 million | $294.3 million | -12.0% |
| Retail Revenue | $207.9 million | $230.9 million | -10.0% |
| GoPro.com Revenue | $51.0 million | $63.3 million | -19.0% |
| Units Shipped | 881,000 | 923,000 | -4.6% |
| Average Selling Price | $294 | $319 | -7.8% |
| Subscription Revenue | $27.5 million | Not disclosed | 10.6% of total revenue |
| Subscription Attach Rate | 45% | Not disclosed | Improvement |
| Subscriber Retention Rate | 67% | 65% | Improvement |
The company’s focus on product innovation, market expansion, and strategic restructuring, along with its competitive advantages, positions it to navigate future growth opportunities effectively.
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Updated on 16 Nov 2024
Resources:
- GoPro, Inc. (GPRO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of GoPro, Inc. (GPRO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View GoPro, Inc. (GPRO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.