GoPro targets $40M adjusted EBITDA for 2026 as innovation cycle accelerates with new product launches

Earnings Call Insights: GoPro (GPRO) Q3 2025

MANAGEMENT VIEW

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CEO Nicholas Woodman described Q3 as a period of "significant progress in our strategy to grow our business by developing our hardware and software offerings, and diversifying our hardware and software offerings." He highlighted the launch of three new hardware products and several software products, stating "we launched 3 new hardware products and several new software products that helped us exceed our Q3 revenue guidance." Woodman pointed to exceeding Q3 revenue guidance, execution efficiency, and momentum for expected unit revenue and profitability growth in Q4 and 2026.

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Woodman underscored the launch of the MaX2 360-camera, the ultra-compact LIT HERO camera, and Fluid Pro AI gimbal, noting MaX2 opens a "new growth segment," and LIT HERO targets a younger demographic. He added, "we're excited to regain market share with the launch of our MaX2 360-camera, and we're fully further expanding our TAM with LIT HERO."

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The CEO cited progress on tech-enabled motorcycle helmets in collaboration with AGV and highlighted a Technology & Engineering Emmy Award for GoPro's 360 technology. He emphasized the company's move to serve "as an incredible foundation to build on with the planned launch of several exciting new products in 2026 that we believe will result in revenue, profit and market share growth across our business."

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Woodman focused on software innovation, new AI-driven editing tools, and a subscriber AI training program, stating "GoPro subscribers have contributed more than 270,000 hours of video content during the AI training program's invitation-only outreach period."

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CFO & COO Brian McGee reported, "For the third quarter of 2025, revenue was $163 million and gross profit was 35.2%, in line with guidance. We achieved a second consecutive quarter of positive cash flow from operations of $12 million, a $14 million improvement year-over-year." McGee cited better-than-expected camera demand, a 30% year-over-year channel inventory decline, and four straight quarters of inventory reduction.

OUTLOOK

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McGee forecasted Q4 2025 revenue to reach $220 million at the midpoint of guidance, non-GAAP net income per share of $0.03 plus or minus $0.02, and adjusted EBITDA positive $12 million, compared to a prior year adjusted EBITDA loss of $14 million.

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Q4 gross margin is expected at 32% at the midpoint of guidance, with operating expenses of $63 million. GoPro aims to end 2025 with $60 million to $65 million in cash and an additional $50 million available under its ABL facility.

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For 2026, McGee projected "grow units and revenue in 2026 based on both our existing lineup of products as well as new products and services expected to be introduced next year," full year operating expenses of approximately $250 million, and adjusted EBITDA to be greater than $40 million. The company expects to end 2026 with approximately $80 million in cash, plus or minus $5 million.

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Management flagged ongoing margin pressure from tariffs and rising component prices, partially offset by supply chain improvements and price increases.

FINANCIAL RESULTS

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GoPro reported Q3 2025 revenue of $163 million and gross profit of 35.2%. Channel inventory declined 30% year-over-year. Cash flow from operations was $12 million, a $14 million improvement from the previous year.

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Demand, as measured by sell-through, was 5% above internal forecasts. The company achieved a second consecutive quarter of positive cash flow from operations.

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Street ASP for Q4 is estimated at $350. GoPro expects Q4 unit sell-through to be 625,000 units, down 18% year-over-year.

Q&A

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Erik Woodring, Morgan Stanley: "Nick, maybe if I just start on 4Q sell-through, I think it was saying that you expect sell-through to be down, I think it was 18% year-over-year. Can you just talk about kind of the puts and takes there?" Nicholas Woodman responded, "It's clear that we didn't launch a new flagship HERO camera this year in Q3 for Q4 sales. And what I can say is, that is strategic in preparation for 2026 launches. So a little bit of patience now, yields, we believe, significant upside in 2026."

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Woodring: "I'd love if you could just talk where you think kind of the camera innovation can, needs or should go from here?" Woodman explained, "the opportunity for growth is in diversification and meeting more of the specific needs of the market, not through one SKU...what I would say is diversification, diversification, diversification. You're seeing that already in our product line, and you'll see that scale in 2026."

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Woodring: "What gives you the degree of confidence to kind of guide the way that you did?" Woodman replied, "all of our research shows that there's clearly an opportunity to diversify our product lineup to better meet the diversified needs of the market. That's what the road map delivers in 2026."

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McGee added, "even in the fourth quarter of this year...we remain on track for our sell-through and sell-in targets for the fourth quarter."

SENTIMENT ANALYSIS

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Analysts posed questions with a neutral to slightly negative tone on Q4 sell-through and innovation roadmap, seeking clarity on strategy and confidence for 2026.

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Management maintained a confident and optimistic tone throughout, especially in discussing 2026 plans, with Woodman repeating "diversification" and McGee stating, "we believe our strategy is working."

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Compared to the previous quarter, management's confidence in innovation and profitability growth is more pronounced, while analysts remain focused on near-term demand and market share shifts.

QUARTER-OVER-QUARTER COMPARISON

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Management shifted from highlighting cost discipline and board refresh in Q2 to emphasizing innovation and new product launches in Q3.

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Q3 guidance now targets profitability growth in Q4 and 2026, with an explicit adjusted EBITDA goal of $40 million for 2026, compared to Q2's focus on resuming revenue growth and managing tariffs.

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Analysts continued to question consumer demand and GoPro's ability to regain market share, but management's responses shifted from defensive in Q2 to more proactive and forward-looking in Q3.

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The strategic focus evolved toward TAM expansion through new product categories and a next-generation processor debut in 2026.

RISKS AND CONCERNS

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Management cited "heightened uncertainty that exists due to volatility in tariff rates, consumer confidence, competition, component supply chain and global economic uncertainty."

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Gross margin pressure remains a risk due to tariffs and rising component costs, partially offset by supply chain diversification and price increases.

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The company amended its debt agreement in response to tariff changes and continues to manage inventory and liquidity conservatively.

FINAL TAKEAWAY

GoPro's management emphasized renewed momentum in Q3 2025, underpinned by a diversified hardware and software lineup, strong execution, and the launch of new products targeting expanded markets. The company projects a return to unit, revenue, and profitability growth in Q4 2025, with a clear aim for adjusted EBITDA exceeding $40 million in 2026, supported by continued innovation, supply chain improvements, and cost controls amid ongoing macroeconomic and tariff-related uncertainties.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/gpro/earnings/transcripts]

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