GoPro Subscriptions, New Products Fuel 3rd-Period Profit Beat

GoPro shares soar after its third-quarter report shows growing subscriptions and a new-product launch.
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GoPro  (GPRO) - Get Report shares on Friday jumped after the consumer-electronics company beat Wall Street's third-quarter earnings expectations, boosted by a growing subscription service and the launch of the Hero9 Black camera.

Shares of the San Mateo, Calif., company at last check leaped 25% to $8.26.

GoPro swung to adjusted net income of $31 million, or 20 cents a share, from a loss of $61.3 million, or 42 cents, in the year-earlier period. Analysts surveyed by FactSet were looking for adjusted earnings of 6 cents a share.

Sales more than doubled to $280.5 million, beating Wall Street's call for sales of $234.5 million.

GoPro launched Hero9 Black in September. GoPro touted the camera's resolution, saying users could shoot "5K video with serious detail even when zooming in and capturing 14.7 megapixel frame grabs. [The camera] also records in 4K, 2.7K, 1440p and 1080p."  

GoPro ended the third quarter with 501,000 subscribers, up 35% sequentially and 65% from a year earlier.

Cash and investments totaled $147 million at the end of the third quarter, almost twice the $79 million of a year earlier.

Brian McGee, chief financial officer and chief operating officer, said the company's direct-to-consumer and subscription-centric strategy expanded margin, increased subscribers and lowered operating expenses, resulting in GAAP and non-GAAP profitability.

"This approach is also enabling efficient working-capital management as we drove (days sales outstandingdown 25% sequentially, lowered channel inventories and reduced our own investments in inventory," McGee said.

GoPro Founder and Chief Executive Nicholas Woodman said in a statement that "thanks to consistent momentum throughout the quarter and the strong launch of Hero9 Black coupled with our GoPro subscription service, in the third quarter GoPro achieved GAAP and non-GAAP profitability, generated $100 million of operating cash flow, and surpassed 500,000 subscribers."