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Something I find really interesting is the decreasing gross margins: 2011 2012 2013 Gross margin 52% 43% 37% Net inc. mar

by antr 12y ago

Something I find really interesting is the decreasing gross margins: 2011 2012 2013 Gross margin 52% 43% 37% Net inc. margin 11% 6% 6% I'm curious to know what is creating that margin reduction... pricing pressure or cogs. Additionally, the net income margin seems to be stabilised at 6%, which seems to me pretty standard for hardware plays. Still, the most refreshing part of this technology S1 is that GoPro has no losses! Good for them.

gdilla 12y ago
maybe they'll need to add saas like cloud storage backups like dropcam, so they can increase lifetime revenue per customer even further.
- antr 12y ago
  yup, more a flickr for video. agree
kcg 12y ago
They also disclose units shipped (1.15MM in 2011, 2.32MM in 2012 and 3.85MM in 2013). A simple revenue/units calculation would imply that revenue per unit is increasing ($205 in 2011, $227 in 2012, $256 in 2013). This is a primitive analysis for a number of reasons, but it suggests that pricing pressure is not the issue. The MD&A, on page 64, also states that higher product costs were the primary reason for the gross margin decreases in 2012 and 2013, and that there was a 14% increase in average selling price in 2012.
- mynegation 12y ago
  Depends on how you define "pricing pressure". By the similar calculation the average COGS per unit in 2011, 2012, and 2013 is $97.11, $128.67, $162.07 respectively. It grows faster than the revenue per unit. Which may mean upward price pressure from suppliers, downward price pressure from consumers, or both.
  - kcg 12y ago
    Yes. I took the question as asking whether absolute revenue per unit was going down or absolute COGS per unit was going up (or both). Obviously there are different perspectives from which we can look at absolute and relative pricing pressure, and with everything in finance it depends on definitions.
mynegation 12y ago
If you use "common size financial statements" technique (e.g. in income statement everything is sized as a percentage of revenue), you will see that COGS ("cost of revenue" in their statements) as a share of revenue grew: 47.7% in 2011, 56.8% in 2012, 63.3% in 2013. That was partially offset by a growth in sales, marketing, general and administrative expenses (SG&A) that was slower than growth in revenue.
rasz_pl 12y ago
I'm curious to know what is creating that margin reduction Chinese clones and cheap 'good enough' action cameras(mobius) from the bottom, Sony Action Cam from the top. If you need top of the line action camera Sony is a really strong contender, not only do they offer great picture quality, but also in a friendlier form factor.
- epaladin 12y ago
  I've got the Sony HDR-AS15. Liked the price, and the availability of a standard tripod mount on the waterproof case it came with. As for image quality, the output you get on the SD card doesn't match the capability of the sensor- looking at the raw output from the microHDMI port vs the encoded files- there needs to be many more bitrate options. The top end GoPro models have that right. I don't always need 1080p, and so most of the time I just use 720, but I really want an SHQ 720p mode that cranks the bitrate- that would be beautiful. I've also used it quite a bit for still frame interval timelapse, and have been similarly disappointed in the grainy over-compressed look of them. verdict: good value, kind of pricey accessories for what you get, just adequate video quality, excellent audio for an action cam, good flexibility (video and timelapse options, HDMI out, mic in, decent waterproof case).
  - rasz_pl 12y ago
    HDR-AS100V does 50Mbps XAVC. AS15 is Hero3 Silver competitor, you cant expect it to do Black bitrates. I liked my HDR-AS15 for light sensitivity, it does crisp video where cheap cameras show dark room.
    - epaladin 12y ago
      It's a little frustrating since all the Sony models so far have had the same sensor.
bedhead 12y ago
COGS. HERO3 and HERO3+ cameras have lower margins. They have the fancy Ambarella 4k chips in them and volumes are still relatively low so chip prices are high without the scale. COGS is already coming down though, dropped 10% in Q1. Though they don't break it out, they must make insane margins on the mounts and accessories.
josu 12y ago
Without having looked at the data I would speculate that competition. When competition comes into play you are usually forced to lower your margins. When the Go PRO first came out, AFAIK, there was no good alternative, and thus they could get away with charging a higher price. Now, that there is more competition they have to either lower their prices or raise the specs of the product they offer. Then again, this is pure speculation and the reason may have nothing to do with competition.

by antr 12y ago

gdilla 12y ago

maybe they'll need to add saas like cloud storage backups like dropcam, so they can increase lifetime revenue per customer even further.

antr 12y ago
yup, more a flickr for video. agree

kcg 12y ago

They also disclose units shipped (1.15MM in 2011, 2.32MM in 2012 and 3.85MM in 2013). A simple revenue/units calculation would imply that revenue per unit is increasing ($205 in 2011, $227 in 2012, $256 in 2013). This is a primitive analysis for a number of reasons, but it suggests that pricing pressure is not the issue. The MD&A, on page 64, also states that higher product costs were the primary reason for the gross margin decreases in 2012 and 2013, and that there was a 14% increase in average selling price in 2012.

mynegation 12y ago
Depends on how you define "pricing pressure". By the similar calculation the average COGS per unit in 2011, 2012, and 2013 is $97.11, $128.67, $162.07 respectively. It grows faster than the revenue per unit. Which may mean upward price pressure from suppliers, downward price pressure from consumers, or both.
- kcg 12y ago
  Yes. I took the question as asking whether absolute revenue per unit was going down or absolute COGS per unit was going up (or both). Obviously there are different perspectives from which we can look at absolute and relative pricing pressure, and with everything in finance it depends on definitions.

mynegation 12y ago

If you use "common size financial statements" technique (e.g. in income statement everything is sized as a percentage of revenue), you will see that COGS ("cost of revenue" in their statements) as a share of revenue grew: 47.7% in 2011, 56.8% in 2012, 63.3% in 2013. That was partially offset by a growth in sales, marketing, general and administrative expenses (SG&A) that was slower than growth in revenue.

rasz_pl 12y ago

I'm curious to know what is creating that margin reduction Chinese clones and cheap 'good enough' action cameras(mobius) from the bottom, Sony Action Cam from the top. If you need top of the line action camera Sony is a really strong contender, not only do they offer great picture quality, but also in a friendlier form factor.

epaladin 12y ago
I've got the Sony HDR-AS15. Liked the price, and the availability of a standard tripod mount on the waterproof case it came with. As for image quality, the output you get on the SD card doesn't match the capability of the sensor- looking at the raw output from the microHDMI port vs the encoded files- there needs to be many more bitrate options. The top end GoPro models have that right. I don't always need 1080p, and so most of the time I just use 720, but I really want an SHQ 720p mode that cranks the bitrate- that would be beautiful. I've also used it quite a bit for still frame interval timelapse, and have been similarly disappointed in the grainy over-compressed look of them. verdict: good value, kind of pricey accessories for what you get, just adequate video quality, excellent audio for an action cam, good flexibility (video and timelapse options, HDMI out, mic in, decent waterproof case).
- rasz_pl 12y ago
  HDR-AS100V does 50Mbps XAVC. AS15 is Hero3 Silver competitor, you cant expect it to do Black bitrates. I liked my HDR-AS15 for light sensitivity, it does crisp video where cheap cameras show dark room.
  - epaladin 12y ago
    It's a little frustrating since all the Sony models so far have had the same sensor.

bedhead 12y ago

COGS. HERO3 and HERO3+ cameras have lower margins. They have the fancy Ambarella 4k chips in them and volumes are still relatively low so chip prices are high without the scale. COGS is already coming down though, dropped 10% in Q1. Though they don't break it out, they must make insane margins on the mounts and accessories.

josu 12y ago

Without having looked at the data I would speculate that competition. When competition comes into play you are usually forced to lower your margins. When the Go PRO first came out, AFAIK, there was no good alternative, and thus they could get away with charging a higher price. Now, that there is more competition they have to either lower their prices or raise the specs of the product they offer. Then again, this is pure speculation and the reason may have nothing to do with competition.