On Monday, GoPro Inc (NASDAQ:GPRO) posted its initial fourth quarter earnings report for the three months that ended in December 31, 2017. The action camera company posted a massive decline on its revenue for the fourth-quarter revenue due to a weaker demand on its products during the previous holiday season. GoPro chief executive officer Nicholas Woodman stated that the company saw a soft demand for its HERO5 camera despite a number of marketing support.
For the fourth quarter GoPro expects its revenue to reach $340 million which represents a decline of $80 million for the HERO5 Black, HERO5 Black, and HERO5 Session camera price protection as well as that of the Karma drone. The numbers are also lower than analysts expectations of the company posting a revenue of $476.06 million for 2017’s fourth quarter.
GoPro also expects its fourth quarter gross margin to be between 24% to 26% while their non-GAAP gross margin is expected to be between 25% to 27%. For the fourth quarter period, the company had cash and cash equivalents of $247 million which is $50 million higher from the third quarter.
Workforce Layoff
Also on Monday,the company also announced that it would let go more than 1,250 employees as of September 30 last year decreasing its overall workforce to 1,000 employees all over the globe. GoPro founder and chief executive officer Nicholas Woodman also announced that he would cut his cash compensation for 2018 to $1.
While the company will continue pursuing the production of new products aimed at targeting both current and new customers this coming year. The company’s new direction would also lead them to a reduction of $80 million in their operating expenses compared to that the company has spent back in 2017.
GoPro’s Karma drone which has peaked number two in terms of market position due to its price back in 2017 is also facing serious competition this year due to the number of potential challenges that the current drone and aerial market is showing.
Weak Earnings Guidance
While the initial earnings report of the company did not mostly disappoint all investors, the company announced that the charges caused by the restructuring will impact the company this coming first quarter which will be elaborated by the company further this coming February on the official release of its fourth quarter earnings as well as its outlook for the coming year.
GoPro Inc shares slumped by almost thirty percent during the most recent trading session following the series of announcements released by the company including its outlook for its fourth quarter earnings which is below most analyst expectations.