GET TO KNOW GOPROIN JUST 9 SLIDES

GoPro is most famous for its line of HERO action cameras, but the company also develops other hardware and software for recording, editing, and sharing videos. The company also distributes user-generated content through its GoPro Entertainment segment and licenses videos through GoPro Licensing.

What does GoPro do?

Image source: GoPro.

Hardware sales: GoPro currently makes nearly all of its revenue from sales of its cameras and accessories. The company said that a lack of retail sales was the main cause of the 31% year-over-year revenue decline, reported in its preliminary Q4 2015 results.

GoPro’s key revenue segment

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How GoPro performed in the most recent quarter

• The company expects $435 million in revenue, a 31% decline year-over-year.

• Non-GAAP operating expenses will be between $150 million and $152.5 million.

• Non-GAAP gross margins will land between 44.5% and 45.5%.

• GoPro expects full-year revenue of $1.6 billion, a 14% increase year-over-year.

Preliminary Q4 2015 results

Image source: GoPro.

The company views GoPro Entertainment and GoPro Licensing as future revenue drivers, but it’s going to take some time to turn these into money makers. The company admits that it’s unsure how it’s going to turn user-generated content into a major revenue source.

How GoPro’s expanding

Image source: GoPro.

Image source: GoPro.

“We believe we have significant opportunities to establish new revenue streams from these software, services and entertainment investments.

However, we do not have significant experience deriving revenue from the distribution of GoPro content, and we cannot be assured that these ongoing investments, which will occur before any material revenue contribution is received, will result in increased revenue or profitability.” — GoPro

GoPro also has plans to expand into the drone market with its forthcoming Karma drone. The company has released video footage taken by the drone and says the device will launch some time in 2016.

How GoPro’s expanding

Image source: GoPro.

Potential trouble spots

GoPro’s lack of revenue diversity became clear in Q4 2015. Part of the problem came from a lack of demand for the company’s new HERO4 Session camera. GoPro was forced to drop the price of the Session, which resulted in a $21 million charge.

Image source: GoPro.

Potential trouble spots

The company also laid off 7% of its workforce in the quarter, which leaves some investors questioning how well the company is executing its plans for additional growth.

Image source: GoPro.

Future growth

But it’s not all doom and gloom for GoPro. The action camera market is expected to have a compound annual growth rate of 22% over the next four years. GoPro will likely benefit from that growth, particularly if it can tap additional revenue through its content distribution and licensing endeavors. Image source: GoPro.

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