Jabra, owned by GN, is known for its hearing, audio, video, and gaming solutions; as well as its popular and well-reviewed Elite and Talk consumer lines of true wireless earbuds and headphones. But the company says it will be winding down the latter, with plans to get out of the consumer headphones market altogether.
According to a prepared announcement, GN says that the decision was made due to strong performance in the hearing division, which will become the company’s primary focus along with “more attractive parts of GN’s business.”
Jabra began to refocus its Elite product line to the premium market in 2023, which the company says has resulted in stronger profitability. However, the company says the investment required for future innovation and growth in the competitive space is deemed “unjustified in the long-term given associated risks.” The Talk product line, meanwhile, follows a similar logic and is positioned in the declining mono Bluetooth market. Following a thorough business review, the decision was made to gradually wind-down both the Elite and Talk product lines.
“The decision to gradually wind down the Elite and Talk product lines is part of our commitment to focus on attractive markets where we can deliver profitable growth and strong returns,” says Peter Karlstromer, CEO of GN Store Nord, comments. “We have demonstrated that we can compete in even the most challenging categories with our leading technology and go-to-market strengths. We did this with our Elite line by delivering multiple worlds-first innovations for consumers, especially in true wireless earbuds, driving global market share gains. The markets, though, have changed over time, and it is today our assessment that we cannot generate a fair return on investment compared to the many other opportunities we have within our Hearing, Enterprise, and Gaming businesses.
“I am very grateful to our retail partners,” he continues, “who have supported us on the Elite and Talk product lines, as well as to the consumers who made us a part of their lives. We remain committed to working closely together to make this a successful wind down, including continuing with the launch of our final Elite products – the second generation of the highly acclaimed Elite 8 Active and Elite 10 – which are the best earbuds we ever made.”
GN will reduce the inventory of the affected products, of which most is expected to be completed by the end of 2024. GN will, however, continue to service and support customers for several years. This commitment to retail customers is underlined by the global announcement of two next-generation editions of the popular Elite 8 Active and Elite 10 premium earbuds. The Elite 8 Active Gen 2 and Elite 10 Gen 2, which will be the last two product introductions in this product line, will be available from later this month.
The decision to gradually wind-down the Elite and Talk product lines will negatively impact the revenue in the Gaming & Consumer division. As a consequence of the gradual wind-down, including extraordinary promotional activities to reduce inventories, the 2024 revenue in the Consumer business is assumed to be impacted by around DKK -450 million compared to 2023.
Following strong execution in the first five months of the year, the Hearing division is assumed to partly off-set the negative impact from the gradual wind-down, supported by continued strong uptake of ReSound Nexia. The development in the Gaming business and in the Enterprise division in the first five months of the year has been in line with the original assumptions. For the Enterprise market specifically, it is still assumed that the market will turn into positive growth sometime in the second half of the year.
As a result of the strong performance in the Hearing division and the gradual wind-down, the group organic revenue growth guidance is narrowed from “2% to 8%” to now “2% to 6%”.
The gradual wind-down will include extraordinary promotional activities, which is expected to have a negative impact on the profitability in the affected product lines for the rest of the year. In addition to this, the group will incur extraordinary costs of around DKK -200 million in the remainder of 2024 (the majority is expected in Q2 2024) related to the gradual wind-down, including severance payments, write-down of prior development projects and inventories, of which the majority is expected to be non-cash.