GoPro's new Hero 8 Black had the best sales month of any camera in the company's history, according to third-quarter financial results released on Thursday. GoPro says sales of the new camera increased by 40 percent compared to the first month of Hero 7 Black sales in 2018 – the camera that set the company's previous record. People have spent years guessing that the increase in smartphone photography would lead to GoPro's demise. But instead, the growing demand for outstanding social media content – a hunger fueled by the rise of smartphones – has created an environment where every new GoPro sells better than ever.
If Hero 8 Black's strong sales continue, it could lead to a monster holiday for GoPro. Hero 7 Black's strong performance outside the gate last year led to a strong fourth quarter that helped GoPro turn its first profit since 201
Thursday's figures weren't absolutely amazing: GoPro pulled in just $ 131 million in revenue, the lowest amount it has generated in a single quarter since its release in 2014. And it lost only shy of $ 75 million. But if you read between the lines in these two numbers, you can get a sense of how GoPro's multi-year effort to cut costs pays off.
To say, GoPro's had six quarterly losses worse than this in history, but all of them came in quarters where the company generated far more revenue. By spending the last few years trimming the workforce, getting out of the drone business, and focusing its camera lineup, GoPro has lowered the cost of doing business enough to withstand quarters where the company doesn't raise a ton of money. In fact, GoPro CFO Brian McGee said Thursday that the $ 99 million the company spent on operating expenses this quarter was the lowest that figure has been in five years.
In other words, a neighborhood with so little income a few years ago would have been devastating. Instead, the company's shares were up around 6 percent in afternoon trading. (GoPro would probably have generated more revenue in the third quarter as well, had there not been a slight delay in Hero 8 Black production.)
As flagship cameras continue to perform well, GoPro has been trying to slowly build up other revenue-generating parts of the business. One example is the new GoPro Max, a 360-degree camera that is far easier to operate than its predecessor in 2017, the GoPro Fusion. The company says Max also had a relatively strong first month, selling four times as much as it did the first month with Fusion sales. The $ 499 lower price tag probably helped, too.
"We believe Max will play an increasingly important role in our business going forward, helping to raise ASP's [average selling price] and gross margins, while delivering wow in innovation that our customers demand," said GoPro- CEO Nick Woodman at a conference call Thursday afternoon. "Simply put, all signs indicate that Hero 8 Black and Max are unquestionable hits."
GoPro also announced that it has passed 300,000 active paying subscribers to GoPro Plus, the company's cloud storage service, which also includes benefits such as appointments and camera repairs. This represents an increase of 66 percent compared to the number of subscribers at this time last year. With a price tag of $ 5 per month, GoPro Plus generates a modest $ 1.5 million each month for the business. Woodman said Thursday that the company expects to double the number of subscribers in 2020 as well.
While GoPro owes much of the success of the impressive distribution network set up over the past decade, the company also continues to generate more sales on its own website, which helps increase margins. GoPro said on Thursday that October sales on its site jumped 50 percent compared to October 2017.
GoPro has also taken advantage of the years from the fact that it has never had a steady direct competitor, despite numerous attempts by everyone from Sony to Garmin and TomTom. DJI – whose dominance in drones was one of the reasons why GoPro left the market so quickly – released an action camera this year, and there is no shortage of knockoff cameras on Amazon and Alibaba. But figures shared by GoPro on Thursday show that not only are the cameras overwhelmingly popular in the age of the smartphone, and the company continues to tighten its grip on the action camera – and the general digital camera market.