GoPro Files $100 Million IPO In Preparation For Fundamental Business Shift

The go anywhere, do anything, capture everything, wearable camera creator GoPro GPRO recently filed an S-1 registration statement for a $100 million IPO to list on the NASDAQ under the ticker GPRO.

GoPro has nailed its core business of making tiny cameras. In 2011, the company reported $24.6 million of net income. The year ending 2013, the company earned $60.6 million in net income, a 57 percent compounded annual growth rate. Since launching its first camera model, the HD GoPro in 2009, the company has sold more than 8.5 million cameras, including 3.8 million in 2013.

Acknowledging the highly competitive camera market and the mobile phone's ability to potentially replace stand-alone cameras, GoPro is seeking to take its globally recognized brand and turn it into a media powerhouse. However, GoPro really hasn't figured out how to make money in that segment yet.

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According to the S-1, GoPro is “investing to scale GoPro as a media entity and develop new revenue opportunities by increasing production of GoPro originally produced content while simultaneously increasing the aggregation and redistribution of our customers' “best of” UGC (User Generated Content). Additionally, we are investing to develop, distribute and promote GoPro programming on additional partner platforms such as Virgin America and Xbox Live.”

GoPro has been developing strategic relationships with marketing partners to use their products and services to promote their own brands. An example provided by the S-1 is, “Supercross similarly mounts GoPro capture devices to professional dirt bike racers' helmets and uses the first-person perspectives to enhance its television broadcasts. As a result, GoPro benefits not only from the expanded brand awareness that traditionally comes with such marketing partnerships, but also being recognized as our partners' technology enabler.”

Undertaking such a fundamental business shift poses numerous risks. “If we do not effectively maintain and further develop our sales channels, including developing and supporting our retail sales channel and distributors, our business could be harmed.” Despite growing their net income handsomely over the last few years, the company still relies heavily on holiday sales and if it falls below forecasts, “our overall financial condition and results of operations could be adversely affected.”

The transition from camera maker to media brand company will be challenging as almost all the company's revenue has been derived from sales of cameras and accessories. Fortunately, the company has the foresight to realize it makes a product that is quickly becoming a commodity, and is positioning itself for future growth by combining, “our self-capture technology and the popularity of social media,” to “create a significant media opportunity for GoPro.”

GoPro makes it clear: “Our success depends on our ability to maintain the value and reputation of our brand.”