After earnings miss sent shares down more than 7% in after-hours trading, raised forecast sends stock to gains of almost 5%
GoPro Inc.’s second-quarter earnings and revenue fell short of expectations Thursday, but executives believe they will make up for the shortfall in the second half of the year, and shares moved to gains after initial declines.
GoPro GPRO, -4.91% posted a net loss of $11 million, or 8 cents a share, compared with a loss of $76 million, or 55 cents a share, in the year-ago period. After adjusting for stock-based compensation and other factors, the action-camera manufacturer reported a profit of 3 cents a share after a loss of 15 cents a year prior. Analysts surveyed by FactSet had been modeling adjusted earnings per share of 4 cents.
GoPro saw a 3% rise in revenue, to $292 million from $283 million, but that fell short of expectations, as analysts had been modeling $302 million on the top line. The company said that revenue would have been up 9% excluding the impact from the aerial business, which GoPro exited in 2018.
Shares dove more than 7% in immediate after-hours trading following the release of the results, but then recovered to gains of almost 5% by the end of a later conference call, in which executives shared details on an increased forecast for the second half. GoPro’s stock has gained 20% this year, as the S&P 500 index SPX, -0.90% has risen 18%.
Executives were more focused on sales of cameras with higher price tags than overall revenue, though, as higher margin sales led to better earnings. The company said that sell-through of cameras priced at $300 and above rose by more than 90% on a year-over-year basis.
“Given our continued sell-through momentum, channel inventory levels and the strength of new products slated for later this year, we are raising our outlook for the second half of 2019,” Chief Executive Nick Woodman said in the announcement.
In a later conference call, Chief Financial Officer Brian McGee detailed the guidance increase, saying that revenue would be $1.25 billion to $1.28 billion, up from a previous forecast of $1.21 billion to $1.24 billion. He said GoPro increased the midpoint of its adjusted-earnings guidance 14% to 40 cents a share. GoPro had previously guided for earnings of 35 cents to 45 cents a share.
Specifically, GoPro executives said that they expect $715 million to $746 million in revenue, with standard earnings of 10 cents to 30 cents per share and adjusted earnings of 37 cents to 49 cents per share. Analysts on average were expecting adjusted earnings of 41 cents a share on sales of $714 million, according to FactSet.