Renowned portable video camera maker, GoPro, Inc. (GPRO) reported strong second-quarter 2014 earnings with Non-GAAP earnings coming in at 8 cents a share. This compared favourably with the Zacks Estimate of a loss of 12 cents a share. Quarterly earnings also improved significantly from the loss of 3 cents reported in the prior-year quarter.
Profits for the second quarter were primarily driven by strong demand for the company’s Hero 3+ Black Edition and its accessory products. Further, during the reported quarter, the company also witnessed notable volume of quality content generated by users, translating into a whopping 200% year-over-year increase in video views on YouTube.
Revenues
For the second quarter, GoPro reported a 38.1% year-over-year increase in revenues to $244.6 million compared with $177.1 million in the year-earlier period. On a sequential basis, revenues surged 3.8% from $235.7 million in the first quarter of 2014.
Second-quarter revenues also surpassed the Zacks Consensus Estimate of $238 million. The notable increase in revenue was primarily driven by strong camera sales and the achievement of a major milestone in July related to the shipment of the 10 Millionth Cumulative Capture device.
Margins
For the second quarter, the company reported gross profit (Non-GAAP) of $102.9 million while gross margin in the quarter was 42.2% compared with 32.3% in the second quarter of 2013 and 41.1% in the first quarter of 2014.
Operating income (Non-GAAP) in the second quarter of 2014 was $17.8 million compared with an operating loss of $3.2 million in the second quarter of 2013 and operating income of $20.9 million in the first quarter of 2014.
During the second quarter, the company invested heavily which increased its research & development expenses to $34.7 million from $28.7 million in the prior-year quarter.
Cash and Balance Sheet
Exiting the quarter, the company had cash worth $104.9 million as against $101.4 million as on Dec 31, 2013. Long-term debt as on Jun 30, 2014 stood at $41.4 million versus $53.3 million as on Dec 31, 2013.
GoPro received net cash proceeds of $200.8 million from closing of its initial public offering on Jul 1, 2014. Therefore, the proceeds are not included in the cash balance as of Jun 30, 2014.
Notably, GoPro is a portable video camera maker offering cameras that can be attached to moving objects or even people. These cameras are specially used by sportsmen or sky divers to capture intricate details of a sporting episode.
GoPro currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Skullcandy, Inc. (SKUL), Dolby Laboratories, Inc. (DLB) and Panasonic Corporation (PCRFY). While Skullcandy sports a Zacks Rank #1 (Strong Buy), both Dolby Laboratories and Panasonic Corp. carry a Zacks Rank #2 (Buy).
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