For GoPro, IPO’s a family affair
San Mateo action camera maker set to ride the wave of publicmarket
SAN MATEO— Ten years after GoPro began selling small, durable cameras for athletes to record their tricks and daring feats, the company has been embraced by a loyal following of extreme sports athletes and adventure seekers who have helped it become one of the most successful and beloved consumer gadget companies in years.
This week it’s striving to earn the embrace of Wall Street as it pre-
pares for its initial public offering, but may find it tougher to get investors as excited as its loyal fans.
With profit of more than $117 million for the past three years, GoPro will begin trading on the Nasdaq this week, becoming one of the rare tech companies to go public with profits. The San Mateo company is expected to price its shares Wednesday evening and sell its stock to the public Thursday, offering 17.8 million shares and potentially raising $491.3 million. The IPO is expected to give the entire company a market value of up to $3 billion.
Public pressure
But GoPro’s IPO yanks the company out of the warm waters of customer fanfare and into the stormy public market, where it will face pressure every quarter to please investors. Selling cameras and accessories won’t cut it much longer; Francis Gaskins, director of research at Equities. com, says GoPro’s rate of revenue growth — 125 percent in 2012 and 87 percent last year — won’t continue. Already, sales have been shaky, with GoPro reporting a 7.6 percent decline in revenue in the first quarter to $235.7 million; profit for the first quarter dropped 52 percent to about $11 million.
Instead of relying on slumping camera sales, GoPro must figure out a way to make money from all of the nail-biting video people are capturing on their cameras, analysts say.
“The long-term viability of the company depends on their ability to become a content platform,” said Chris Chute, research director of the global imaging practice at market research firm IDC. “Because in hardware, you either diversify or you get acquired.”
GoPro, which declined to make anyone available for interviews or respond to written questions, signaled in its IPO filings that’s what it plans. It has already partnered with Microsoft for a channel on Xbox and launched its own channel on Virgin America flights, but said it won’t make any revenue from those partnerships this year.
Already, GoPro is a story of transformation — of the Woodman family, who, led by Bay Area surfer Nicholas and funded by his father, created an empire; of the consumer hardware industry, which has pivoted from complex gadgets with fine-print instruction manuals to easy-to-use gear branded with sex appeal and adrenaline; and of outdoor adventure and extreme sports, which have, through millions of GoPro videos shared on Facebook and YouTube, become a widely shared experience. You no longer have to strap skis to your back and hike through waist-deep snow to get a glimpse of the back country on a great powder day, or jump out of a plane to grasp the rush of sky diving. There are 6,000 such videos uploaded everyday from GoPro cameras to YouTube.
Because GoPros can go places smartphones cannot, the device has turned many sports that had been solitary adventures into social events, posted on Facebook or shared with family.
“It gives a purpose to my surfing when I’m out there for a long day,” said Redwood City surfer Luke Kilpatrick, 33. “It’s a way of reconnecting with everyone else when I’m doing something on my own.”
For some, the high-definition, wide-angle videos offer the sweetest memory. Andy Radowick, 52, of Santa Clara, is saving his GoPro videos of his adventures hang-gliding, scuba diving, skiing and kayaking for his golden years.
“I don’t want to be one of those people when I get to be 70 or 80 years old (where) I can’t find movies and pictures of old friends I shared the experiences with,” he said. “When I want to relive an experience, I can just turn on my computer.”
Family operation
GoPros lack the sleek features and pretty colors consumers have come to expect in a gadget industry dominated by glittery iPhones, but founder and CEO Nick Woodman, a longtime surfer, wasn’t focused on pretty. He first conceived GoPro as a strap to tether film cameras to surfers’ wrists more than a decade ago, and in 2009 launched the company’s first HD model. So far it has sold 8.5 million cameras.
Largely a family operation — Nicholas is the CEO and his wife and sisters work for the company — GoPro was funded mostly by Nicholas’s father, Dean, a prominent Silicon Valley investment banker, along with cash from Nicholas and his mother, according to media reports. GoPro chose not to raise venture funding until 2011, and in 2012 a $200 million investment from Foxconn, the Chinese contract manufacturer, gave the company a value of more than a billion dollars. The company in 2012 left its roots in Half Moon Bay — a vibrant surfing community — to be closer to Silicon Valley tech in San Mateo.
By selling cameras at affordable prices — $200 to $400 — and distributing to big-box retailers such as Walmart and Best Buy, GoPro has found customers outside the extreme sports community. Parents record their children’s soccer games, and cyclists in San Francisco use the cameras to document accidents and determine who was at fault.
But as a public company aiming to become a full-fledged media corporation with channels in every home or on every computer, GoPro has a long way to go, analysts say.
“When you think of GoPro you think of athletics, you think of sports, you think of adrenaline, you think of crazy BMX biker jumps,” said Whitney Fishman Zember, senior director of innovation and consumer technology at media firm MEC. “They have to continue growing their fan base (and) finding new ways to get into people’s lives and into people’s homes.”