GoPro (GPRO 1.70%) shares were up more than 15% year to date leading into its second-quarter 2019 report last Thursday evening, aided by a pair of reasonably solid quarterly updates that highlighted the action-camera specialist's progress toward recapturing sustained, profitable growth.

Sure enough, when its Q2 results hit the wires, GoPro finally showcased its swing to adjusted (non-GAAP) profitability. But that swing wasn't quite pronounced enough to appease the market, and the stock ultimately plunged nearly 13% to end the week as traders digested the news.

Let's take a deeper look, then, both at what GoPro accomplished in the first half of 2019, and where the company hopes to be around this time next year.

Man pressing touchscreen to take photo of a waterfall using GoPro camera.

Image source: GoPro.

GoPro's ambitious second-half promise

For perspective, in the second quarter GoPro's revenue grew a modest 3.4% year over year to $292.4 million, translating to adjusted earnings of $4 million, or $0.03 per share. But both figures were technically below analysts' consensus expectations, which called for earnings of $0.04 per share on revenue of $302 million.

However, GoPro also raised its full-year guidance despite its relative underperformance in Q2, indicating management believes it's poised for a particularly strong second half. More specifically, GoPro boosted its full-year 2019 outlook to call for revenue growth of 9% to 12% (up from between 7% and 10% previously), with adjusted earnings of $0.40 per share (a $0.05 increase from the middle of its old range).

In a prepared statement with GoPro's second-quarter announcement, CEO Nick Woodman said the company should achieve those goals through a combination of continued sell-through momentum, maintaining healthy channel inventory levels, and "the strength of new products slated for later this year."

Of course, GoPro's staggering post-earnings drop last week indicates the market isn't convinced it can meet those goals. But during the subsequent conference call, Woodman expanded on his enthusiasm for the rest of 2019, stating:

Thanks to continued demand in all regions, channel inventory is at appropriate levels globally and we believe we are well-positioned for the launch of new products later this year. And after previewing our upcoming fall product lineup, our distributors and retail partners are very excited about the continued innovation in our upcoming products, and we believe we'll be able to expand our leadership position during the holiday quarter. GoPro continues to lead in our markets globally, and in Q2 we did not see an impact to sell-through as a result of competition.

A more diversified approach

Considering GoPro commanded an incredible 94% of dollar share of its category in the U.S. last quarter, according to NPD data, and claimed three of the top five camera spots in the category for an 83% dollar share in Europe, it's clear competition isn't much of an issue. But how does the company expect to drive incremental share gains and growth from here? And what, exactly, makes GoPro's upcoming product lineup so special?

Recalling GoPro's launch of its high-end HERO7 Black camera last September, Woodman elaborated (emphasis added):

We learned a tremendous amount from HERO7 Black and what it is specifically about our products both current and future that would excite consumers in the line. And whereas last year holiday success was really dependent on HERO7 Black being the star, I'd say our strategy this year is to perpetuate our flagship as the runaway star. But we've built more performance and excitement into our entire product line. So we think we're de-risking our 2019 Q4 strategy by having a much stronger lineup overall where each of the SKUs we believe is going to be a strong contributor and that can help us both de-risk the quarter, grow and maintain and build upon the momentum we've got but then carry that importantly into 2020 as well.

So GoPro is apparently leaning on what it views as a more diversified, performance-centric product line that should leave consumers little doubt that GoPro's offerings are the way to go.

Then again, GoPro is also seeing encouraging momentum from its $4.99-per-month Plus subscription service, where paid subscribers soared 15% sequentially, to 252,000, from the end of Q1 to Q2. If GoPro can leverage its growing next-gen camera base to further accelerate this source of high-margin revenue, it could make its quest for sustained profitability that much easier to achieve.

The bottom line

So where will GoPro be one year from today? For bullish investors' sake, it should be demonstrating a clear path to not only achieving profitability on an adjusted basis -- which excludes the impact of one-time items like restructuring costs -- but also as reported under generally accepted accounting principles (GAAP).

With the stock currently trading near its all-time low, investors could enjoy a massive rally if GoPro can both deliver a strong 2019 holiday season and carry its momentum into the new year. Until GoPro provides more specifics on its innovative new products, however, no astute investor can say with any reasonable degree of certainty whether that will turn out to be the case.