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Smartphones didn't kill GoPro, they just made it stronger

The new Hero 8 Black from GoPro had the best first sales month than any other camera in the company's history, according to third quarter financial results announced Thursday. In addition, GoPro says sales of the new camera had 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 year guessing that the increase in smartphone photography would lead to the demise of GoPro. But instead, the increasing demand for striking social media content – a hunger driven by the rise of smartphones – has created an environment in which every new GoPro sells better than ever.

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If the strong sales of the Hero 8 Black continue, this can lead to a monster holiday for GoPro. The strong performance of the Hero 7 Black last year led to a strong fourth quarter that helped GoPro turn its first profit since 2017. GoPro was is already predicting between $ 555 million and $ 590 million in revenue in the coming fourth quarter for Thursday's release. Any amount that is generated within that window would be good enough for GoPro's second-best quarter ever.


Thursday's figures were not all fantastic: GoPro received just $ 131 million in revenue, the lowest amount generated in one quarter since it was released in 2014. And it only lost $ 75 million. But if you read between the lines of those two digits, you can get an idea of ​​how GoPro's multi-year effort to save costs is bearing fruit.

Indeed, GoPro suffered six quarterly losses that were worse than those in its history, but they all came in quarters where the company generated much more revenue. By shortening staff in recent years, leaving the drone company and concentrating the camera setup, GoPro has reduced the cost of doing business to withstand quarters where the company does not raise tons of money. Brian McGee, CFO of GoPro, said on Thursday that the $ 99 million the company spent on operating expenses this quarter was the lowest in five years. (GoPro would probably also have generated more revenue in the third quarter if there had been no slight delay in the production of Hero 8 Black.)

While his flagship camera & # 39; s continue to perform well, GoPro has been trying to slowly build up other revenue-generating parts of its business. An example is the new GoPro Max, a 360-degree camera that is much easier to operate than its predecessor 2017, GoPro Fusion. The company says the Max also had a relatively strong first month and sold four times as much as in the first month of the Fusion sale. The lower $ 499 price tag has probably helped too.

"We believe Max will play an increasingly important role in our business and help raise ASPs (average selling price) and gross margins, while providing the wow of innovation that our customers demand," said GoPro CEO Nick Woodman. call a conference Thursday afternoon. "Simply put, all the characters indicate that Hero 8 Black and Max are indisputable hits."

GoPro has also announced that it has passed 300,000 active paying subscribers to GoPro Plus, the company's cloud storage service, which also offers benefits such as deals and camera repairs. That means an increase of 66 percent compared to the number of subscribers at the moment last year. With a price tag of $ 5 per month, GoPro Plus generates a modest $ 1.5 million for the company each month. Woodman said on Thursday that the company expects the number of subscribers to double in 2020 as well.

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And while GoPro owes much of its success to the impressive retail distribution network it has set up over the past ten years, the company continues to generate more revenue on its own website, helping to increase margins. GoPro said Thursday that sales in October on its website increased by 50 percent compared to October 2017.

The development of …