Adventure camera maker, GoPro, recently announced that it has done massive organizational changes at the company. Taking into account the impact of the coronavirus pandemic, the company is laying off 20% of its workforce to conserve cash.
GoPro has announced a $100 million reduction to 2020 operating expenses including a workforce reduction of more than 20%, over 200 employees, due to COVID-19 impact.
The company plans to further reduce non-headcount related operating expenses to $250mn in 2021.
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.
In an official press release, 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.”
In addition to 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.
The company statement added, “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.”
However, the company also said that 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.
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