GoPro’s new Hero 8 Black had the best first month of sales of any camera in the company’s history, according to third quarter financial results released Thursday. What’s more, GoPro says sales of the new camera were up 40 percent compared to the first month of Hero 7 Black sales in 2018 — the camera that set the company’s previous record. People have spent years guessing that the rise in smartphone photography would lead to GoPro’s demise. But instead, the increasing demand for standout social media content — a hunger that’s driven by the rise of smartphones — has created an environment where each new GoPro sells better than ever.
If the Hero 8 Black’s strong sales continue, it could lead to a monster holiday season for GoPro. The Hero 7 Black’s strong performance out the gate last year led to a strong fourth quarter that helped GoPro turn its first profit since 2017. GoPro was already forecasting between $555 million and $590 million in revenue this coming fourth quarter before Thursday’s release. Any amount of revenue generated within that window would be good enough for GoPro’s second best quarter ever.
Thursday’s numbers weren’t all stellar: GoPro pulled in just $131 million in revenue, the lowest amount of money it has generated in a single quarter since going public in 2014. And it lost just shy of $75 million. But if you read between the lines of those two numbers, you can get a sense of how GoPro’s multiyear effort to cut costs is paying off.
To wit, GoPro’s posted six quarterly losses worse than this one in its history, but all of them came in quarters where the company generated far more revenue. By spending the last few years trimming workforce, exiting the drone business, and focusing its camera lineup, GoPro has lowered the cost of doing business enough to withstand quarters where the company doesn’t pull in a ton of money. In fact, GoPro CFO Brian McGee said Thursday that the $99 million the company spent in operating expenses this quarter was the lowest that figure’s been in five years.
In other words, a quarter with that little revenue a few years ago would have been devastating. Instead, the company’s stock was up around 6 percent in after-hours trading. (GoPro likely would have generated more revenue in the third quarter, too, if it hadn’t been for a slight delay in Hero 8 Black manufacturing.)
As its flagship cameras continue to perform well, GoPro has been trying to slowly build back up other revenue-generating parts of its business. One example is the new GoPro Max, a 360-degree camera that’s far simpler to operate than its 2017 predecessor, GoPro Fusion. The company says the Max also had a relatively strong first month, selling four times as many than it did in the first month of Fusion sales. The lower $499 price tag also likely helped.
“We believe Max is going to play an increasingly important role in our business going forward, helping to raise ASPs [average selling price] and gross margins, while delivering the wow in innovation our customers demand,” GoPro CEO Nick Woodman said on a conference call Thursday afternoon. “Simply put, all signs indicate Hero 8 Black and Max are unquestionable hits.”
GoPro also announced it has passed 300,000 active paying subscribers to GoPro Plus, the company’s cloud storage service, which also includes perks like deals and camera repairs. That represents a 66 percent increase over the number of subscribers at this point last year. With a $5 per month price tag, GoPro Plus is generating a modest $1.5 million every month for the business. Woodman said Thursday that the company expects to double that subscriber count in 2020, too.
While GoPro owes much of its success to the impressive retail distribution network it’s set up over the last decade, the company also continues to generate more sales on its own website, helping to boost margins. GoPro said Thursday that October sales on its website jumped 50 percent compared to October 2017.
GoPro has also benefitted over the years from the fact that it’s never had a consistent direct competitor, despite numerous attempts by everyone from Sony to Garmin and TomTom. DJI — whose dominance in drones was one of the reasons GoPro exited the market so quickly — released an action camera this year, and there is no shortage of knockoff cameras on Amazon and Alibaba. But numbers shared by GoPro Thursday show that, not only are its cameras overwhelmingly popular in the age of the smartphone, the company keeps tightening its grip on the action camera — and overall digital camera — markets.