GoPro, Inc.’s GPRO shares dropped over 8% in after-hours trading after the action-camera maker reported mixed first quarter 2016 results. The delay of the launch of its much-anticipated consumer drone Karma also weighed on investors’ sentiments.The delay, along with a terrible revenue decline, highlight the uphill battle that GoPro faces as it attempts to broaden its customer base.GoPro’s first-quarter 2016 adjusted loss (with stock-based compensation adjustments) of 73 cents per share was wider than the Zacks Consensus Estimate of a loss of 64 cents by 14%.Also, non-GAAP loss of 63 cents for the quarter was in stark contrast to earnings of 24 cents in the comparable quarter last year.Abysmal top-line contraction along with high operating expenses (particularly R&D expenses) extended losses for the company.Inside the HeadlinesGoPro’s revenues plunged to roughly half of the prior-year quarter’s tally, to $183.5 million (down 49.5% from $363.1 million in first-quarter 2015). Despite the terrible decline, the figure beat the Zacks Consensus Estimate of $170 million. Revenues continued to be weighed down by slowing demand for GoPro’s Hero gadgets, which is gradually shrinking in a competitive, saturating market. Also, sales took a hit after GoPro had to slash the price on its latest model, the Hero4 Session, twice.The company generated about 54% of its revenues from international sales, with revenue from APAC jumping about 9% on a year-over-year basis.For the quarter, the company’s gross profit was slashed by over 60% from the previous-year quarter, and came in at $59.7 million. Non-GAAP gross margins shrank to 33% compared to 45.2% in the first-quarter 2015, dragged down by charges booked for HERO4 camera’s price cut, inventory write downs and discontinued cameras.Non-GAAP operating loss came in at $96.8 million, as against an operating income of $49.1 million generated last year.In the quarter, the GoPro Mobile App was downloaded 2.8 million times leading to nearly 27 million cumulative downloads. On the other hand, GoPro Studio installations totaled about 1.5 million.Notable DevelopmentsDuring the quarter, the company recorded an $8 million charge related to inventory write downs, excess purchase commitments and marketing development funds. This follows the tens of millions of charges that the company booked last quarter in connection to the re-pricing of its HERO4 camera, excess inventory and obsolete tooling.Last quarter, GoPro also said it would cease production of certain entry-level cameras, in its attempts to turn around its slumping business.On the other hand, the company made significant improvements to its editing software over the quarter. Their editing apps Quik, Splice and GoPro are experiencing a robust adoption. In its efforts to expand its user base, GoPro is committed to tap into the mobile market by enabling users to edit footage shot on their smartphones.However, the company postponed the planned release of its much-awaited quadcopter drone – Karma – to the holiday season, citing that it is in the process of making the product “much more than a drone”.LiquidityExiting the quarter, the company had cash and cash equivalents of $248.7 million, down from $279.7 million at the end of Dec 2015.Guidance Despite such disappointing results, the company reiterated its guidance for 2016. It continues to project revenues to lie in the range of $1.35-$1.5 billion. With modest sequential growth in the second quarter, the company expects the bulk of the expected annual revenue growth to materialize in the second half.Our TakeIn recent months, the company has been struggling to achieve its earlier growth and go beyond its trademark action cameras. Its latest camera, the Hero 4 Session, failed to hold consumers’ interest at a time when the market for action cameras is becoming increasingly saturated. It seems that the market is flooded with cheaper and better alternatives to GoPro’s HERO series, severely hurting its bottom line. Competitive forces from Sony Corporation SNE and China's Xiaomi are also exerting pressure on GoPro’s market share.Recent events and consequent share price reactions have made GoPro one of the worst performing recent IPOs. GoPro's shares are down almost 80% over the past year.Now, it seems like GoPro is betting huge on the success of Karma to expand its client base. The company is facing pressure to establish a more mainstream market for its cameras, but tough competition from smartphones from brands such as Apple Inc. AAPL and Samsung Electronics Corp. are making it difficult for the company.Whether GoPro can successfully innovate beyond its action cameras and whether its foray into consumer drones and virtual reality will help turn the fortunes around for this Zacks Rank #3 (Hold) stock, remains to be seen.A better-ranked stock that could be worth a look now is Dolby Laboratories, Inc. DLB, sporting a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SONY CORP ADR (SNE): Free Stock Analysis Report DOLBY LAB INC-A (DLB): Free Stock Analysis Report APPLE INC (AAPL): Free Stock Analysis Report GOPRO INC-A (GPRO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research