GoPro lays off 200 employees representing 20% of the company
GoPro plans “office space reductions in five geographies” as well as a reduction in operating expenses. The company expects a “$100 million reduction in non-GAAP operating expenses in 2020 and plans to further reduce operating expenses into 2021 to $250 million.” The 2021 reduction in operating expenses will come from “non-headcount related operating expenses.”
Behind the scene, GoPro is making some radical changes to its business model. The company is still selling cameras, accessories and subscriptions. But it is switching to a direct-to-consumer model with GoPro.com acting as the main storefront.
The company will stop selling its devices in many retail stores. GoPro will still work with select retailers in some regions as they still generate a lot of sales.
But selling directly on GoPro.com represents the future of the company, which should improve margins. They don’t have to give a cut to retailers when GoPro is acting as the retailer. In 2019, GoPro.com represented a bit more than 20% of European revenue and a bit less than 20% of revenue in the U.S.
“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,” founder and CEO Nicholas Woodman wrote. “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.”
In addition to today’s layoffs, sales and marketing expenditure will be cut down in 2020 and beyond. Woodman himself won’t take a salary for the remainder of the year. The company’s board won’t receive any cash compensation either.
GoPro has withdrawn earnings guidance for Q1 and 2020. The company now expects revenue of $119 million with a non-GAAP EPS loss of $0.30 to $0.40 per share. In pre-market trading, GoPro shares are currently trading at $2.58, 3% below yesterday’s closing price.
Correction: An earlier version of this story mistakenly stated that GoPro will only keep offices in five geographies and that the reduction in operating expenses in 2021 could involve further layoffs. Instead, the company is reducing its real estate portfolio in five geographies and the 2021 reduction in operating expenses will come from non-headcount related operating expenses.