It has been about a month since the last earnings report for GoPro (GPRO - Free Report) . Shares have added about 15% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is GoPro due for a pullback? 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 Q4 Earnings Top Estimates on Revenue Growth
GoPro reported better-than-expected fourth-quarter 2018 results, wherein both the top line and the bottom line beat the respective Zacks Consensus Estimate.
The action video camera maker’s financial performance was mainly driven by strong demand for HERO7 cameras, particularly its flagship HERO7 Black camera. Lower operating expenses and inventory management also remained tailwinds.
On a GAAP basis, net income for the reported quarter was $31.7 million or 22 cents per share against net loss of $55.8 million or loss of 41 cents per share in the year-ago quarter. The year-over-year improvement was primarily due to top-line growth and lower operating expenses. The performance was driven by strong product line-up and efficient execution of operational plans. For full-year 2018, net loss was $109 million or loss of 78 cents per share compared with loss of $182.9 million or loss of $1.32 per share a year ago.
Quarterly non-GAAP net income came in at $42.4 million or 30 cents per share against net loss of $41.3 million or loss of 30 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 4 cents.
The company generated quarterly revenues of $377.4 million, up 12.7% year over year. Notably, GoPro increased both camera unit sell-through and market share in 2018. The top line surpassed the consensus estimate of $376 million. For full-year 2018, revenues decreased 2.7% year over year to $1,148.3 million.
Other Quarterly Details
Non-GAAP gross margin improved to 38.4% from 24.8% in the year-ago quarter, up 1,360 basis points. Non-GAAP operating income was $46 million against loss of $37.4 million. Adjusted EBITDA was $58.8 million against a negative $26.5 million in the prior-year quarter.
Cash Flow and Liquidity
During full-year 2018, GoPro utilized $40 million of cash in operating activities compared with cash utilization of $36.9 million in 2017.
As of Dec 31, 2018, the company had $152.1 million of cash and cash equivalents with $139 million of long-term debt compared with the respective tallies of $202.5 million and $130 million a year ago.
GoPro expects to translate the healthy momentum in its business along with controlled cost into growth and profitability in 2019 while limiting operating expenses below $400 million. The company is optimistic about its prospects, mainly on account of strong demand for its products in end markets. It plans to enhance its Plus subscription service through enhanced benefits and user awareness and aims to work more closely with its retail partners, both in North America and abroad. GoPro is also making investments in merchandising and retail advertising to drive a bigger brand presence while continuing to innovate. It intends to expand footprint in emerging markets like India and remains focused on scaling its CRM efforts to augment customer base.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -157.14% due to these changes.
At this time, GoPro has a great Growth Score of A, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision 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.