GoPro will shut down some offices altogether. There will be offices in five geographies after the round of layoffs. The company expects to reduce operating expenses by $100 million in 2020. But it says that it’ll cut operating expenses again by $250 million in 2021. In other words, if you still have a job at GoPro, you could lose your job next year.
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GoPro has withdrawn earnings guidance for Q1 and 2020.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.