GoPro Conference Call Pulls Stock Off Record Lows, Shares Remain Pressured

After the close, GoPro (GPRO) reported fourth quarter results and issued guidance for the first quarter and fiscal 2016, temporarily sending shares to record lows.

WHAT’S NEW: GoPro reported Q4 loss per share of 8c, against analyst expectations of 0c, and Q4 revenue of $436.6M, below consensus estimates of $496.1M. The company also provided Q1 revenue guidance of $160M-$180M, below estimates of $298.04M, Q1 adjusted gross margin of 36%, plus or minus 100 basis points, adjusted operating expenses of $165M-$170M, and adjusted Earnings Before Interest, Taxes, Depreciation and Amortization of negative $95M, plus or minus $2.5M.

GoPro also issued a fiscal year 2016 revenue outlook of $1.35B-$1.5B, against consensus estimates of $1.61B. In its earnings press release, GoPro noted that its Q4 revenue included a $21M reduction for price protection related charges resulting from the HERO4 Session repricing in December. Its full year revenue also reflected charges of approximately $40M for price protection related charges in connection with reductions of the HERO4 Session selling price in September and December.

WHAT’S NOTABLE: During the Q4 conference call, GoPro CEO Nicholas Woodman addressed concerns over the company’s market share, saying the company’s growth rate has slowed, with certain analysts attributing that to competitive threats and the company’s ability to reach beyond its core customers. However, Woodman said that is not how GoPro sees it. The CEO explained that the company currently has a growing category share lead in North America and Europe. In Q4, GoPro increased its market share by 180 basis points, year-over-year, to 21.3% of the combined digital camera and camcorder category on a unit basis.

In the action camera category, GoPro’s market share was over 85%, Woodman noted, adding that data shows GoPro’s competitors not having a significant impact on its business. Addressing concerns that it will be difficult for the company to go beyond its core customer base, Woodman explained that it isn’t a question of the size of the camera but its ability to deliver a seamless content solution. It is still too hard to offload, access, and edit GoPro content, he said, and the company is ‘doubling down’ in response to that issue. The company cut its workforce by 7% in January, reallocating resources to accelerate software and hardware development. The company will also release a new content management application called GoPro for desktop, Woodman said, which will make offloading, accessing, editing, and sharing video content more convenient.