14By James DeRuvo (doddleNEWS)
Driven by the GoPro Karma rapidly becoming the #2 highest selling drone behind the DJI Mavic Pro, GoPro announced their 2nd quarter earnings report last week, showing that after a bad 2016, the worst may be over.
“GoPro is building momentum. Strong demand combined with our cost management and margin initiatives contributed to GoPro’s positive performance in the second quarter.” – Nick Woodman, Founder and CEO GoPro in 2nd Quarter Earnings Call
Last Spring, faced with the stalled launch of the Karma and extreme competition from lower priced Hero Clones, the action camera company was in a severe sales slide that caused a loss of nearly $100 million in 2016. The stock was sliding and GoPro had to act fast. The first step killing several camera lines, including, ironically the lower end Hero and Hero +. These two, along with the Hero + LCD, would compete with lower cost clones at under $300, but reducing the line to just three main cameras, the Hero 4, Hero 4 Silver and the Hero 4 Session would enable GoPro to focus their additional energies moving forward.
Image Credit – Peta Pixel
The result is that with fewer choices, action camera geeks went for the next generation Hero 5 Black and sales began to swing around. To date, the Hero 5 has been the best selling camera in the US for three straight quarters, indicating that perhaps GoPro’s problems were due to having too many choices, rather then lower priced competition. The reality though, is probably a little bit of both.
But cutting the camera line down wasn’t going to do it all by itself. So GoPro laid off a substantial part of its work force, about 300. The result was savings of over $70 million in expenses, and thanks to the stop gap measure of releasing the Karma Grip during the 2016 Holiday season, GoPro benefited from a noticeable uptick in revenue. GoPro still reported a net loss of $30 million for the second quarter of 2017, but that’s almost a tenth of the losses the company suffered in 2016, indicating that the worst may be over.
“HERO6 and Fusion, our 5.2K spherical camera, are on course to launch later this year and we continue to track toward our goal of full-year, non-GAAP profitability in 2017.”
Now, GoPro is starting to look towards the horizon again. Thanks to the success of the Hero 5 in 2017, GoPro is working on getting out the next generation Hero 6 later this fall, and are currently testing the VR centric GoPro Fusion. The 5.4k 360° camera sports an innovative OverCapture feature that allows shooters to “punch out” a 2D camera shot in 1080p from the ultra high definition spherical image.
“It was unfortunate about the recall,” said GoPro’s CEO Nick Woodman to The Verge, “but what we learned was that our existing customers and new customers are really excited about Karma’s value proposition. It means that the foundation has been laid for great things to come in the Karma line.”
And with the GoPro Karma now flying and enjoying successful sales as the number 2 drone in the market, GoPro is also looking to add other, perhaps smaller, versions to compete with the DJI Spark. But can GoPro add even more Karma models to what is an overcrowded consumer drone market? Well, that’s where GoPro’s marketing clout will come in handy. Much like DJI, GoPro has the name plate recognition to be able to push out lesser known brands on store shelves, and that will albeit guarantee that they’ll be able to compete with additional drone products.
But hopefully, they will have learned from their experience with overcrowding their own Hero line, that they’ll keep the Karma line lean and mean, and focus more on smarter features, rather than additional drones to choose from.
Listen to the Q2 2017 Earnings call here.
Hat Tip – The Verge