SAN MATEO, Calif., April 15, 2020 /PRNewswire/ -- GoPro, Inc.
(NASDAQ: GPRO) today announced a strategic re-alignment to become a
more efficient and profitable direct-to-consumer-centric business.
Actions include a $100 million
reduction to 2020 operating expenses including a workforce
reduction of more than 20%, and plans to further reduce
non-headcount related operating expenses to $250 million in 2021.
"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's direct business has become an increasingly meaningful
contributor to profitability in recent years. In 2019, GoPro.com
attracted an average of seven million unique visitors each month,
generated more than 20% of revenue in top European markets and
nearly 20% in the United States.
In addition, GoPro.com gained further ground in Q1 2020, generating
a considerably larger percentage of sales in all regions,
year-over-year.
"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.
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.
"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. "Substantially reduced operating expenses combined with
improving ASP and gross margin significantly lowers the threshold
to achieve profitability."
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 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 reduction 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
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.
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 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.
GoPro will provide complete Q1 2020 results and further strategy
updates on its first quarter earnings report which will take place
in May.
About GoPro, Inc. (NASDAQ: GPRO)
GoPro helps the world celebrate and share itself in immersive
and exciting ways.
GoPro, HERO and their respective logos are trademarks or
registered trademarks of GoPro, Inc. in the United
States and other countries. All other trademarks are the
property of their respective owners.
For more information, visit www.gopro.com. GoPro users
can submit their photos, raw clips and video edits to GoPro Awards
for social stoke, GoPro gear and cash prizes. Learn more
at www.gopro.com/awards. Connect with GoPro
on Facebook, Instagram, LinkedIn, TikTok, Twitter, YouTube,
and GoPro's blog The Inside Line.
Note Regarding Use of Non-GAAP Financial Measures
Non-GAAP items exclude, where applicable, the effects of
stock-based compensation, acquisition-related costs, restructuring
and other related costs, non-cash interest expense, gain on sale
and license of intellectual property and the tax impact of these
items. When planning, forecasting and analyzing financial metrics,
including operating expenses for future periods, GoPro does so
primarily on a non-GAAP basis without preparing a GAAP analysis as
that would require estimates for reconciling items which are
inherently difficult to predict with reasonable accuracy.
Note on Workforce Reduction
Workforce reduction is subject to local consultation processes
in some countries and therefore, these numbers may change
immaterially.
Note on Forward-looking Statements
This press release may contain projections or other
forward-looking statements within the meaning Section 27A of the
Private Securities Litigation Reform Act. Words such as
"anticipate," "believe," "estimate," "expect," "intend," "should,"
"will" and variations of these terms or the negative of these
terms and similar expressions are intended to identify these
forward-looking statements. Forward-looking statements in this
presentation may include, but are not limited to expectations
regarding run rate, growth and profitability prospects in 2020 and
beyond; projections regarding reductions in operating expenses,
workforce, spending and real estate obligations; expectations
regarding shift in strategy, future hires and product launches;
expectations regarding innovation and product roadmap; and
estimated charges in connection with the restructuring. These
statements involve risks and uncertainties, and actual events or
results may differ materially. Among the important factors that
could cause actual results to differ materially from those in the
forward-looking statements are our ability to effectively manage
the impact of the Covid-19 pandemic on our business; the risk that
the restructuring and related reduction in operating expenses may
impact our ability to meet our business objectives and achieve our
revenue and profitability targets, and may not result in the
expected improvement in savings and profitability; our ability to
continue to focus on expense management; the fact that our future
growth depends in part on further penetrating our addressable
market and growing internationally, and we may not be successful in
doing so; our strategic shift to emphasize direct to consumer sales
and the risk that this shift may not prove to be successful; any
inability to successfully manage frequent product introductions
(including roadmap for new hardware, software and subscription
products) and transitions, including managing our sales channel and
inventory, and accurately forecasting future sales; our reliance on
third party suppliers, some of which are sole source suppliers, to
provide components for our products and our reliance on third party
logistics partners to deliver without interruption; our dependence
on sales of our cameras, mounts and accessories, and subscription
services for substantially all of our revenue (and the effects of
changes in the sales mix or decrease in demand for these products
due to the effect of Covid-19 on the economy, or otherwise); the
fact that an economic downturn or economic uncertainty in our key
U.S. and international markets, as well as fluctuations in currency
exchange rates, may adversely affect consumer discretionary
spending; any changes to trade agreements, trade policies, tariffs,
and import/export regulations; the effects of transferring most
U.S.-bound production out of China; the effects and risks of producing
product in Mexico; the effects of
the highly competitive market in which we operate, including new
market entrants; the fact that we may not be able to achieve
revenue growth or profitability in the future; risks related to
inventory, purchase commitments and long-lived assets; difficulty
in accurately predicting our future customer demand; the importance
of maintaining the value and reputation of our brand; the risk that
the e-commerce technology systems that give consumers the ability
to shop online do not function effectively; the risk that we will
encounter problems with our distribution system; the threat of a
security breach or other disruption including cyberattacks; the
concern that our intellectual property and proprietary rights may
not adequately protect our products and services; and other factors
detailed in the Risk Factors section of our Annual Report on Form
10-K for the year ended December 31,
2019, which is on file with the Securities and Exchange
Commission (SEC), and as updated in future filings with the SEC.
These forward-looking statements speak only as of the date hereof
or as of the date otherwise stated
herein. GoPro disclaims any obligation to update these
forward-looking statements.
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SOURCE GoPro, Inc.