GoPro upbeat on future as profits sparkle

GoPro's profits leapt 52 per cent in the first quarter, beating Wall Street's forecasts, the action-camera maker reported on Tuesday as it announced the acquisition a "spherical video" start-up aimed at virtual reality headsets.

GoPro's shares shot up more than 6 per cent in after-hours trading as it told analysts on an earnings call that its revenues for the current quarter would range between $380m and $400m, up around 59 per cent year on year, with diluted earnings of 24-26 cents per share, well ahead of market expectations for the second quarter.

The Silicon Valley-based company, whose shares are up around 50 per cent since it went public last June, grew sales 54 per cent year on year to $363m in the first three months of the year, thanks to 1.3m camera sales in the quarter, up 58 per cent.

At the same time, GoPro boosted its gross margin from 40.9 per cent to 45.1 per cent. Earnings came in well ahead of analysts' estimates at 24 cents per share, with net income of $16.8m.

However, GoPro's operating expenses are increasing even faster than sales at 77 per cent, year on year, as it invests in R&D, international expansion, creating new video-editing software and expanding distribution of content filmed on its cameras. Headcount increased 50 per cent to 1,076 compared with same period a year ago.

"We are making investments in talent, technology, software and innovative new products that will fuel growth and strengthen GoPro's ecosystem," said Nick Woodman, GoPro founder and chief executive, in a statement.

Among those investments is Kolor, a French start-up that enables capture of so-called "spherical videos".

These 360-degree images can be viewed on smartphones or virtual reality headsets such as Google Cardboard and Oculus VR. Alexandre Jenny, Kolor chief executive, said these videos can "transport an audience to another time and space".

Terms of the acquisition were not disclosed but the move is another indication of the hopes that tech companies have for a new generation of virtual reality headsets, after Facebook paid $2bn for Oculus last year.

"We see an incredible opportunity for GoPro to be at the forefront of the virtual reality movement," Mr Woodman said.

On a conference call with analysts, Tony Bates, GoPro president, said that operating expenses related to software development were up 125 per cent, contributing to a big increase in app downloads.

In recent months, GoPro has struck new deals to bring its channel video site to Vessell, TV streaming box Roku and Microsoft's Xbox One console.

More than half GoPro's first-quarter sales came from outside the US, including sales growth of 66 per cent in Europe, the Middle East and Asia Pacific.

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