Citing a consumer drone market that is experiencing a “growth crisis,” Parrot says its own consumer drone business experienced a 45% drop in revenue in the third quarter compared to the third quarter of 2017.
In Q3 2018, the company’s consumer drone business generated EUR 12.5 million in revenue, compared to EUR 22.6 million from the same time last year. According to Parrot, this number reflects the change in its product portfolio, with the significant reduction in sales for historical products at the end of their lives. This has not been able to be offset by the new Parrot ANAFI drone’s rollout this summer, the company notes.
“The end of this year is being complicated by a significant and unexpected contraction of the consumer drone market, which has occurred at the time of the launch of our new drone, the Parrot ANAFI,” comments Henri Seydoux, Parrot’s chairman, CEO and leading shareholder. “While the technological performance and the positive reaction received by this product are in line with our expectations, and even though we have gained market share, in a harsh environment whist preserving our pricing positioning and strategy, the market reversal has held back our revenue growth and impacted all our financial balances.”
On the other hand, Parrot says its commercial drone business recorded total revenues of EUR 9.3 million during the quarter, representing a 4% increase over the third quarter of 2017. The company attributes this growth in part to the “solid performances” of subsidiary Pix4D in software and services revenue, which rose 28%. Parrot’s equipment sales, however, dropped 23%.
By the end of 2019, Parrot plans to have a portfolio of companies focused exclusively on drones: Parrot Drone, including interests in Planck Aerosystems and Sky Hero; Pix4D; senseFly; Airinov; Micasense; an interest in Chouette Vision; and interests in Iconem and BioCarbon.
To further adjust to the consumer drone market’s instability, Parrot Drone is also enacting a departure plan covering around 100 employees. As of Sept. 30, Parrot had 320 staff for commercial drones and 291 for consumer drones. The realignment to focus on commercial drone staff will continue moving forward; the departure plan will concern the consumer business, primarily for international sites, as well as in France, where it will be based on a voluntary approach. It will not affect the R&D team, the company notes.
“To adapt to the pace of this [consumer drone] market, which is very unstable for the time being, our organization is evolving, and our action plan was approved by the board of directors on Nov. 22,” Seydoux continues. “It aims primarily to secure our capacity for action to respond to the drone market’s potential over the long term. The possibilities offered by the Parrot ANAFI, the solidity of our commercial subsidiaries, and our development on the defense and security market will be key assets to bounce back: With a decentralized and flexible strategy, we aim to break even on commercial drones by the end of 2019, while safeguarding the resources that will enable us to capitalize on opportunities for acceleration.”