GPRO GoPro Inc

GoPro Inc. is buying two video-editing app companies for a total of $105 million in cash and stock as the company seeks to diversity its top line amid a challenging market for its wearable cameras.

Shares, which have plunged 71% in the past 12 months, rose 2.5% to $12.18 in midday trading Tuesday.

The move to buy video-editing developers Stupeflix, based in Paris, and Vemory, based in Austin, Texas, is the latest by GoPro to shore up its struggling business. The company last month said it would cease production of some entry level cameras, following a recent 7% reduction in its workforce and a 50% price cut to its newest camera.

"If sales of our capture devices continue to decline in future periods, our financial condition, operating results and cash flows will be materially affected," the company said in the filing.

Analysts say GoPro faces challenges because the action-camera market is becoming saturated and the company has struggled to find new sources of revenue. The company last month reported results that missed expectations, with fourth-quarter revenue slipping 31% year-over-year.

Though the company is seeking to expand its portfolio, it isn't planning to give up on its core business. Even with the acquisitions announced this week, the company said it expects to continue to derive the substantial majority of its revenue from sales of cameras and accessories "for the foreseeable future."

GoPro said it believes further declines in the price or unit demand for its cameras and related products would harm its results "more seriously than it would if we derived significant revenue from a variety of product lines and services."

The editing apps in the deal announced Monday, Stupeflix's Replay and Vemory's Splice, are currently available on Apple Inc.'s iOS with plans to launch to Android, the operating system made by Alphabet Inc.'s Google, later this year.

Replay automatically combines a user's video clips and photos into a single video, while Splice gives a more hands-on experience, with more advanced tools more commonly found in desktop editing software, GoPro said. Teams with both apps would keep operations at their respective headquarters under the terms of the deal.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

March 02, 2016 09:15 ET (14:15 GMT)

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