SAN MATEO, Calif. (BRAIN) — Shares of GoPro Inc. tumbled 17 percent in after-hours trading Wednesday after the action camera maker reported third-quarter earnings that fell short of analyst expectations due largely to weak sales of its compact, lightweight HERO4 Session camera, introduced during the second quarter.
GoPro reported a 43 percent year-over-year increase in revenue to $400.3 million and said it shipped 46 percent more devices — 1.6 million units total — than it did in the year-earlier period. But the revenue figure was well short of the $433.6 million analysts had expected, and earnings per share came in at 25 cents, missing the expected 29 cents.
“While we experienced strong-year-over-year growth, this quarter marks the first time as a publicly traded company that we’ve delivered results below the expectation that we outlined in our guidance. We take this situation very seriously,” founder and CEO Nicholas Woodman said in an earnings call after market close Wednesday.
Woodman said HERO4 was initially priced too high at $399, the same price as GoPro’s premium HERO4 Silver camera, causing “consumer confusion.”
“This experience taught us how hard it is to sell against GoPro and our premium HERO4 Silver and Black products,” he said.
In September, GoPro reduced the price to $299.
“Since the price adjustment, we’ve seen an increase in sell-through. As a percentage of product mix, Session is now selling in line with what we would typically expect of a product at this price point. Translation: While it got off to a slow start, Session is now performing as a full-fledged member of the HERO4 lineup,” Woodman said.
He also blamed weaker-than-expected sales on an underfunded marketing budget that affected demand for products. GoPro will bolster its marketing spend for the fourth quarter, Woodman said, including a return to television advertising following a year’s absence.
“We believe we are approaching the holidays with a strong product lineup, priced appropriately, and backed by a world-class global marketing campaign,” Woodman said.
Before Wednesday’s earnings announcement, GoPro’s shares had fallen 40 percent over the preceding three months amid concerns that GoPro is a “one-trick pony” lacking product diversity. Those concerns were compounded by weak third-quarter guidance from Ambarella Inc., which produces chips for GoPro cameras, and the lackluster launch of HERO4 Session.
GoPro recently announced plans to introduce a consumer drone in the first half of 2016. The company released its first video footage from the prototype quadcopter after Wednesday’s earnings call.
GoPro went public in June 2014. The company's stock is traded on the Nasdaq exchange under the GPRO symbol, and its stock performance is tracked on BRAIN's stock page.
