Thanks to strong demand for its new Hero7 Black action camera, GoPro has managed to return to profits after many quarters of losses. Its net income reached 31.7 million in the three months ended Dec. 31, 2018, compared with a net loss of $42.3 million in the year-ago quarter. The gross margin gained no less than 13.9 percentage points, reaching 37.9 percent, mainly due to lower operating expenses.
The group's revenues were up by 12.7 percent to $377.4 million in the quarter. Sales in the Asia-Pacific region achieved a record $103 million – a 49 percent increase – and European revenues jumped by 30 percent to $117 million.
On the other hand, North American sales declined by 11 percent, due primarily to the exit of GoPro's aerial business. The company still claims an 87 percent share of the U.S. market for action cameras in terms of units.
In Europe, the company claims an 91 percent share of the market for action cameras priced above $199 in terms of units, up from 83 percent a year ago.
As compared to the year-ago quarter, the number of active paying subscribers went up by 50 percent to 199,000 and the number of social media followers rose by 3 million to around 38 million people, mostly on YouTube and Instagram.
For the full year ended on Dec. 31, 2018, revenues were still off by 2.7 percent to $1,148 million, while the gross margin was down by 1.1 percentage points to 32.6 percent. The company suffered a net loss of $109.0 million for the year, compared with a net loss of $182.9 million for the previous year.
With the regained momentum in the fourth quarter and a continued focus on expense controls, the management is budgeting for growth in sales and profitability in 2019. It plans to grow its Plus subscription service through enhanced benefits and expanded user awareness. It has just launched two extra features: unlimited cloud storage supporting source video and photo quality and increased discounts on accessories bought from gopro.com.
GoPro says it wants to target more specific consumer segments in extreme sports and tourism. It wants to work more closely with retail partners, both in North America and abroad, making investments in merchandising and retail advertising in the front and center spaces of the stores. GoPro is also aiming at growing awareness in emerging markets like India.