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GoPro 2020 Q3 Revenues up 114% As Company Shifts Towards DTC & Subscription Model

Compared to the same quarter from last year, 2020 Q3 results presented by GoPro show a 113.9% increase in revenue. This year has seen GoPro shift their business model towards DTC & subscription, alongside the launch of their Hero 9 camera.

Press Release:
GoPro Announces Third Quarter 2020 Results

GoPro is making excellent products but went through difficult times in the past years. As they shift their business model to DTC and subscription, and launched a new camera in Q3, let’s have a look at their just-released 2020 Q3 results.

During this quarter, GoPro launched a new HERO camera, always a key moment for the company, coupled with a focus on their GoPro subscription service.

What’s a GoPro subscription?
Well, for $4.99/month, you would get cloud storage for your GoPro clips (unlimited), camera replacement and a 50% discount at GoPro.com

Subscription-based businesses tend to deliver more profitability and loyalty from consumers, thus growing the mother of all KPIs, the Consumer LTV – Consumer Lifetime Value. GoPro ended Q3 2020 with 501,000 subscribers, up 35% vs Q2 and 65% vs last year. Subscription might still be a minor part of GoPro’s revenues, but growth in that segment is encouraging.

Camera sell-through was more than 950,000 units in Q3 2020, with the Hero 9 launch boosting revenue to $281 million, a 109% improvement VS Q2 2020, 113,9% improvement VS Q3 2019. The launch also helped increasing gross margin, up to 35.4%, vs 21.7% last year (GAAP).

Restructuring in headquarters and regions – Europe paid a high price with important lay-offs a few months ago – helped contain operating expenses at $90 million, a 9% decrease year-over-year. Inventory levels are also closely monitored. R&D efforts were also cut quite drastically, which can be worrying given how innovation is key to GoPro’s long term success.

In the end, GoPro third-quarter net income was $3.3 million or $0.02 per share, compared to a loss of $74.81 million or $0.51 per share in the prior year.

It looks like GoPro’s turnaround efforts are paying off, at least on the short term. Woodman concluded : “we expect to be profitable for the full year 2020”.

The announced results did beat market expectations. Stock went up 15% in the hours following the announcement.