GoPro's new Hero4 Session camera, Credit: GoPro.
GoPro stock briefly popped following its better-than-expected second-quarter results three weeks ago. But shares of the action-camera maker have since given up those gains and -- thanks, in part, to a nearly 9% drop on no news earlier this week -- now trade down around 7% so far in 2015.
Given all this volatility, now's a great time for investors to pause, take a deep breath, and revisit the trends driving GoPro's business today. Lucky for us, GoPro management spends roughly an hour doing just that with analysts in a conference call each quarter. Here are five of the most important points they discussed during the most recent call:
1. GoPro is finally rolling in China
First, with more than 1.3 billion citizens and a fast-growing middle class, the Chinese market holds enormous promise. But investors should be particularly encouraged that China onlyjustbecame a top-10 revenue-generating country for GoPro. As GoPro further develops its Chinese user interface and mobile app, it seems safe to expect China's contribution should only increase going forward.
2. On GoPro's imminent plans for mobile and the cloud
GoPro is striving to expand its role from "just" a hardware-centric business to also becoming a "media" company -- a long-term vision that incidentally helped it command a higher valuation with its IPO just more than a year ago. Part of that transition requires helping GoPro camera users more easily create and manage content recorded by their various devices, which is where the cloud service and more effective photo and video editing mobile apps come into play. When these apps and services are released, then, investors would do well to keep a close eye on how consumers respond.
3. On GoPro's newest incremental revenue opportunity
Perhaps more importantly, another crucial piece of GoPro's media plans involves figuring out how to most effectively monetize that content. Of course, it's still too early to know how well GoPro's new content licensing portal will fulfill that goal in the near term. But it stands to reason that, with a more streamlined interface for doing so, both marketing pros and content creators alike might jump at the chance to make the most of GoPro's treasure trove of incredible footage.
4. On the arrival of GoPro's quadcopter
More specifically, Woodman made the quadcopter announcement at Recode's Code Conference 2015 in May. But now, his most recent comments shed light on the fact that GoPro is not only still expecting an early 2016 release, but also anticipates differentiating its drone at least in part with an improved user experience. Exactlyhow GoPro intends to implement these improvements remains to be seen, but Woodman also noted earlier in the call that his team is "having a blast testing and refining this differentiated product, one that we believe will be the ultimate accessory for your GoPro."
That said, drones are still expected to be a secondary revenue stream behind GoPro's core camera line. But the resulting contribution could still be significant if GoPro can grab a meaningful slice of the estimated $1.9 billion consumer drone market next year.
5. On what's driving guidance
GoPro's long-term gross margin target is to maintain a range of 42% to 44%. And analysts, for their part, were only expecting GoPro to achieve third-quarter revenue of $401.3 million, with earnings of $0.22 per share. To explain its outperformance in the past, GoPro has stated its premium HERO4 Black and Silver camera models have comprised more than half of each quarter's revenue and units shipped since they were launched late last year. But thanks to the addition of the physically tiny HERO4 Session camera during the quarter -- which is priced the same as the HERO4 Silver at $399 -- GoPro is now set to enjoy a third high-margin contributor to its already impressive results.
The article 5 Things GoPro Inc.'s Management Wants You to Know originally appeared on Fool.com.
Steve Symington has no position in any stocks mentioned. The Motley Fool recommends GoPro. The Motley Fool owns shares of GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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