GoPro has spent the last two years laying off employees, closing entire departments, discontinuing certain products, reintroducing one recalled product, and this fall, announcing a new flagship camera: the Hero 6 Black. All of these things were done with the ultimate goal of returning the company to profitability.
Mission accomplished. The company announced yesterday that the third quarter of 2017 was its first profitable quarter in exactly two years. After bogging itself down with a heavy push into content creation and marketing, a confusing set of competing cameras at the low end of its own camera lineup, and unchecked growth, the camera company pulled itself out of the red and wrung $14 million in profit out of $330 million worth of quarterly revenue.
The company could still have trouble sticking the landing this holiday season
The company’s financial situation still looks challenging in the short term. Slower than expected sales of the Hero 5 Black and declining availability of the old Hero Session are limiting GoPro’s guidance for total 2017 revenue, which is $1.32 billion — up from $1.19 in 2016, but well short of the $1.6 billion it pulled in during 2015.
GoPro is also projecting fourth quarter revenue of $470 million, which would be its worst holiday season in two years. That questionable outlook sent the company’s already struggling stock price diving, as it opened down 13 percent this morning.
Still, Woodman remained confident on the investor call. “We’re actually feeling really good about our guidance for Q4,” he said. “Our goal is to enter 2018 with a bang.”
GoPro has big plans for 2018. The Hero 6 Black put it in a position to return to a yearly cadence of major product releases. (It was two years from the release of the Hero 4 Black and Silver before GoPro announced the Hero 5 lineup.) And during yesterday’s call with investors to discuss the earnings report, CEO Nick Woodman started to tease what’s coming.
Woodman said that the current entry-level GoPro — the original Hero Session, which was announced in 2015 — won’t be around much longer, and that it will be replaced with a new entry-level GoPro next year.
“Demand for GoPro’s entry level Session was much higher than anticipated [this year], and will result in a sooner than expected end of life for this product,” Woodman said on the call, “but [this] identifies a significant opportunity for us to expand our market with a new entry level product slated for 2018.” This new camera will be one of “several new products planned” for GoPro, Woodman stated.
Of course someone asked about Google Clips
“In 2018 we’ve got a new product to address that entry level which we’re even more excited about than Session, because it’s an even better form factor for that price point,” chief operating officer CJ Prober added later.
Woodman and other GoPro executives have mentioned in recent months that the company is likely going to branch into new form factors next year, but this was as specific as they’ve been so far.
All this “form factor” talk spurred one analyst on the call into asking Woodman to address “new competition” in the market — essentially bringing up Google Clips, the search giant’s new and tiny AI-powered camera, without directly naming the product.
“I’m gonna take a wild guess that you’re referring to Google Clips, which, really, I think the media and investment community had a knee jerk reaction to that product being directly competitive to GoPro,” Woodman responded, referencing a slate of articles about the perceived similarities, and the apparent and immediate effect on GoPro’s stock price. He said he wasn’t surprised by that response, and that he thinks the Clips and GoPro’s cameras have “very different use cases.”
“[Clips] doesn’t shoot video, it doesn’t capture sound. It’s generally designed for more static use cases than a GoPro,” Woodman added. The GoPro CEO said he’s encouraged by cameras like Clips because they help raise mass-market consumer interest in cameras like the ones his company makes.
“It was a very difficult two years.”
Returning GoPro to a more confident and profitable place has come with a different kind of price: the company laid off hundreds of employees over the last two years. But there are still more than 1,200 working at GoPro, according to information shared on the earnings call. And Woodman thinks they’re all finally heading in the right direction together.
“It was a very difficult two years capped off with [those last] two rounds of layoffs, which were very challenging from a morale issue,” Woodman told The Verge at the Hero 6 Black launch event in September. “But as soon as you get through them, the people who remain, I think, really appreciate the opportunity. We’re fortunate that we have a really clear and strong vision at GoPro.”