It has been about a month since the last earnings report for GoPro (GPRO Quick QuoteGPRO - Free Report) . Shares have lost about 10.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is GoPro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

GoPro’s Q4 Earnings Miss Estimates

GoPro reported fourth-quarter 2023 non-GAAP earnings of 2 cents per share, which missed the Zacks Consensus Estimate by 33.3%. The company reported earnings of 12 cents in the year-ago quarter.

GoPro generated revenues of $295.4 million, down 8% year over year. The top line also missed the consensus mark by 9.7%.

The company added that consumers were looking for discounts irrespective of already low prices in the holiday season. This led to lower-than-expected sell-through of its HERO10 Black product (priced at $249), which was not sold at discount.

For 2023, revenues came in at $1 billion, down 8% year over year. Non-GAAP loss per share came in at 20 cents for the year. The company reported earnings of 47 cents in 2022.

Quarter in Details

GoPro shipped 895 million camera units during the reported quarter, up 5.3% year over year.

It recorded 2.5 million subscribers, marking 12% year-over-year growth at the end of the quarter under discussion.

Management envisions subscribers at 2024-end to be between 2.5 million and 2.6 million.

Region-wise, revenues from the Americas totaled $126.9 million (43% of total revenues), down 17% from the prior-year levels. Revenues from Europe, the Middle East and Africa were $94.8 million (32.1%), improving 15% year over year. The Asia Pacific generated revenues of $73.7 million (24.9%), down 14% on a year-over-year basis.

Based on channels, revenues from GoPro.com of $67.4 million (22.8%) plunged 47% year over year. Our estimate was pegged at $82.6 million.

In this channel, hardware revenues totaled $42.3 million compared with $106 million in the previous-year quarter. Subscription revenues amounted to $25.1 million, climbing 13% year over year.

Retail channel registered revenues of $228 million (77%), which improved 18% year over year. The uptick was driven by strategic pricing action, increasing retail doors and retail efforts including merchandising. We suggested the metric to be $243.8 million.

Management noted that it added more than 3,200 new retail doors since May 2023, which was ahead of its target. It intends to continue driving door growth with a target of 7,000 additional new doors over the next two years, powered by the launch of new products. GPRO is also planning to upgrade its point-of-purchase merchandisers, augment in-store brand presence and boost account management throughout the retail channel.

The company had $106.3 million in inventory compared with $127.1 million in the year-earlier quarter.

Other Details

Gross profit of $101.1 million decreased 3.1% year over year. Total operating expenses of $110.5 million rose 7.7% year over year. Operating loss totaled $9.4 million against operating income of $1.7 million in the prior-year quarter.

Non-GAAP gross margin came in at 34.4% compared with 35.1% in the year-ago quarter. Entry-level products accounted for 14% of camera revenues in the fourth quarter.

Adjusted EBITDA was $3.267 million compared with $22 million a year ago.

Cameras with suggested retail prices at or above $400 contributed 74% to revenues in the reported quarter compared with 90% in the prior-year quarter.

Cash Flow & Liquidity

In the quarter under review, GoPro generated $43.7 million of net cash from operating activities against $25.6 million generated in the year-ago period. As of Dec 31, the company had $222.7 million of cash and cash equivalents with $92.6 million of long-term debt. The company repurchased 2.8 million shares worth $10 million.

Guidance

For the first quarter of 2024, revenues are estimated to be $145 million (+/- $5 million).  Non-GAAP adjusted loss is forecast to be 25 cents per share (+/- 2 cents). Gross margin is anticipated to be 32.5% (+/- 50 basis points). Street ASP is projected to be nearly $375.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -65.75% due to these changes.

VGM Scores

At this time, GoPro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, GoPro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

GoPro is part of the Zacks Audio Video Production industry. Over the past month, Sonos (SONO Quick QuoteSONO - Free Report) , a stock from the same industry, has gained 4.6%. The company reported its results for the quarter ended December 2023 more than a month ago.

Sonos reported revenues of $612.87 million in the last reported quarter, representing a year-over-year change of -8.9%. EPS of $0.84 for the same period compares with $0.57 a year ago.

For the current quarter, Sonos is expected to post a loss of $0.27 per share, indicating a change of -12.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -58.9% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Sonos. Also, the stock has a VGM Score of A.