SPORTS CAMERA MAKER GOPRO GETS READY FOR - IPO

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Sports camera maker GoPro gets ready for
IPO
SPORTS CAMERA MAKER GOPRO GETS READY FOR - IPO
By Heather Somerville

hsomerville@mercurynews.com

Posted: 06/24/2014 06:06:55 PM PDT0 Comments | Updated: about 19 hours ago

1/5

Erik Esquerra, 42, of Sacramento, wears a GoPro camera attached to his helmet while riding his
surf kayak at Pacifica State Beach in Pacifica, Calif., on Saturday, June 21, 2014. (John Green/
SPORTS CAMERA MAKER GOPRO GETS READY FOR - IPO
Bay Area News Group)

‹›
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        Jun 24:
        Videos: GoPro cameras capture the action, from surfing to dog-sledding

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 prepares for its initial public
offering, but may find it tougher to get investors as excited as its loyal fans.

Charlie Krenz, 52, right, wears a GoPro camera mounted around his chest as he talks to riding
partner Alex Anderson, 54, in Portola Valley, Calif., on Saturday, June 21, 2014. (John Green/
Bay Area News Group) ( JOHN GREEN )

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.

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
SPORTS CAMERA MAKER GOPRO GETS READY FOR - IPO
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 camera 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.
SPORTS CAMERA MAKER GOPRO GETS READY FOR - IPO
"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."

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."

Contact Heather Somerville at 510-208-6413. Follow her at Twitter.com/heathersomervil.

gopro

Founded: 2004
CEO/Founder: Nicholas Woodman
Headquarters: San Mateo (formerly Half Moon Bay)
SPORTS CAMERA MAKER GOPRO GETS READY FOR - IPO
HD cameras sold: 8.5 million
U.S. market share: 45 percent; ranks No. 1 on NPD list of best-selling camcorders for 2013
Full-year revenue: 2011, $234.2 million; 2012, $526 million; 2013, $985.7 million
Profit: Q1 2013, $23 million; Q1 2014, $11 million
YouTube channel: 530 million views, 2 million subscribers
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