April 16, 2020

GoPro announces global restructuring, focus on B2C business

Under the impact of the corona pandemic, the action cam pioneer, GoPro, Inc., announced a strategic re-alignment to become a more efficient and profitable direct-to-consumer-centric business. According to a press release, the actions include a US$ 100 million reduction to 2020 operating expenses, a workforce reduction of more than 20 percent, and plans to further reduce non-headcount related operating expenses to US$ 250 million in 2021. The company also provided preliminary Q1 Results and withdrew its 2020 guidance due to corona crisis.

"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," said Nicholas Woodman, GoPro's founder and CEO. "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 said it will focus event more on its direct B2C business, which had become an increasingly meaningful contributor to profitability in recent years. In 2019, attracted an average of seven million unique visitors each month, generating more than 20 percent of revenue in top European markets and nearly 20 percent in the United States. In Q1 2020, the platform generated, compared with the same period last year, a considerably larger percentage of sales in all regions.

"We have a clear opportunity to super-serve consumers' demand for our products in a more direct and efficient manner which can have a positive impact on the profitability of our business," Woodman added.

While it will continue to sell to select leading retailers in key regions where consumers prefer to purchase offline or indirectly, GoPro said it will be shifting primarily to consumer-direct sales to drive growth in regions where already enjoys a strong share of the market.

"We believe our more direct-to-consumer-centric approach is better aligned with the current business climate, is accretive to ASP and gross margin, and positions us well for when consumer demand begins to normalize," said Brian McGee, GoPro's Chief Financial Officer and Chief Operating Officer.
To lead GoPro's direct-to-consumer growth initiatives, spanning hardware, software and subscription sales, are led by Aimée Lapic, who was named Chief Digital Officer of the company. Ms. Lapic brings years of experience building successful digital businesses, most recently as Chief Marketing Officer for Pandora, and prior to that at Banana Republic where she was Chief Marketing Officer and General Manager for

GoPro also announced 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.

GoPro confirmed these reductions will not impact its 2020 product roadmap, which includes new hardware, software and subscription products that will serve both GoPro camera owners and smartphone-only users.

Additionally, GoPro withdrew its Q1 and full-year 2020 guidance due to global uncertainty related to the COVID-19 pandemic, and provided a preview of its Q1 results: Revenue is now expected to reach approximately US$119 million, with a sell-thru of approximately 700,000 cameras during the quarter. Non-GAAP EPS loss is expected to be in the mid US$ 0.30 loss per share range. While the comnpany said it had cash and equivalents of US$125 million available as of March 31, 2020, channel inventory was reduced by nearly 30%

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