The World’s favourite action camera company, GoPro transformed how an individual captures memories. The company’s products are also widely used in the AV space, where creators, including auto journalists, make the most of a GoPro’s versatility to deliver high-quality content. Not unaffected by the current crisis which is global in nature, the company has announced that its 2020 product roadmap, which includes new hardware, software and subscription products that will serve both GoPro camera owners and smartphone-only users will remain on track. However, the action camera maker will restructure operations to become a more efficient and profitable direct-to-consumer-centric business.
GoPro will aim to achieve a $100 million reduction in operating expenses for this year. This will be achieved by including a workforce reduction of more than 20% and plans to further reduce non-headcount related operating expenses to $250 million in 2021. GoPro will continue to sell to select leading retailers in key regions where consumers prefer to purchase offline or indirectly. However, the Company will be shifting primarily to consumer-direct sales to drive growth in regions where GoPro.com already enjoys a strong share of the market.
To lead the Company’s direct-to-consumer growth initiatives spanning hardware, software and subscription sales, GoPro has appointed Aimée Lapic as Chief Digital Officer. Ms Lapic brings years of experience building successful digital businesses, most recently as Chief Marketing Officer for Pandora, and prior to that at the Banana Republic where she was Chief Marketing Officer and General Manager for BananaRepublic.com.
GoPro’s shift to a more consumer-direct approach includes the following expense reductions:
- $100 million reductions in non-GAAP operating expenses in 2020 and plans to further reduce operating expenses into 2021 to $250 million
- Workforce reduction of over 200 employees, or more than 20%
- Office space reductions in five geographies
- Sales and marketing expenditure reductions in 2020 and beyond
- Additional reductions in spending across the business
Commenting on the decision, Nicholas Woodman, GoPro’s founder and CEO said, “GoPro’s global distribution network has been negatively impacted by the COVID-19 pandemic, driving us to transition into a more efficient and profitable direct-to-consumer-centric business over the course of this year. We are crushed that this forces us to let go of many talented members of our team, and we are forever grateful for their contributions.”
GoPro also shared that at his request, Mr Woodman will forego the remainder of his salary through the end of 2020. Additionally, as of April 14, 2020, GoPro’s Board of Directors volunteered to forego the remainder of their cash compensation through the end of 2020. Additionally, GoPro is withdrawing its Q1 and full-year 2020 guidance due to global uncertainty related to the COVID-19 pandemic, and is providing a preview of its Q1 results:
- Revenue of approximately $119 million
- Non-GAAP EPS loss is expected to be in the mid $0.30 loss per share range
- Street ASP of $350, a 23% sequential increase
- Sell-thru of approximately 700,000 cameras during the quarter
- Reduced channel inventory by nearly 30%
- Cash and equivalents of $125 million as of March 31, 2020
The restructuring of GoPro’s business will result in an estimated aggregate charge of $31 million to $49 million. Cash expenditures will be approximately $5 million of the estimated aggregate charges in the second quarter of 2020 as a result of a reduction in force. The remaining expenditures are approximately $26 million to $44 million primarily pertaining to planned reductions of office space (including $4 million of non-cash charges) and approximately $5 million for other non-cash charges. The Company anticipates the majority of the office space charges will result in future cash expenditures through 2027. The Company anticipates that a substantial portion of these restructuring charges will be reflected in its second-quarter results.