Trouble ahead for Parrot?

TJBC75 · Feb 20, 2019

Not sure how important for the future this is, but saw this article this morning regarding Parrot:

PARROT Drones Deactivates Affiliate Program

If you're selling anything online today, chances are you have an affiliate program. Amazon, DJI, BestBuy...you name it, they all have an affiliate

dronereviewsandnews.com

pmh1nic · Feb 20, 2019

Hard to make any educated judgement based on the article. The earnings report will be a more informative source on Parrot's financial condition.

The consumer drone market took a hit in 2018 after multiple years of growth. Not sure if the market is saturated or the fear of more stringent regulations is the reason for the slowdown (perhaps a combination of both). There is never a good time for a slowdown but it's especially not a good time to have one when you're releasing a new model you're hoping is going to compete with products from your largest competitor.

Kdavis2269 · Feb 20, 2019

Let's lay off staff, close up shop in Canada because it too cold, push out half baked updates and end our affiliate marketing program. I can make an educated guess. Hopefully they can turn things around in time. One thing I don't understand is why the Anafi didn't grab more of the small folding drone market. It really is a nice platform.

pmh1nic · Mar 22, 2019

Parrot release 2018 earnings on March 15th. To sum up their drone business it was a down year for consumer drops and a slightly up year for their commercial drone business...

Parrot 2018 Financial Report

Consumer Drone revenues (48% of Group revenues)

Consumer Drones generated €52.8m of revenues in 2018, down 32%. In total, Parrot Drones, the company housing consumer operations, sold around 413,000 consumer drone units in 2018, compared with around 604,000 in 2017, with volumes contracting 32%.

Following the resizing of the product portfolio in 2017, Parrot presented a new consumer drone in June 2018, the Parrot ANAFI. With its renowned technical features, combining 4K images, zoom and 180° vision, as well as its battery life (25 mins) and portability (foldable and weighing 320gr), Parrot Anafi’s sales, against a backdrop of a sharp slowdown on the consumer drone market in the third quarter, remained well below Parrot Drones’ expectations. Drone market trends were no more favorable in the fourth quarter and revenues for the period came to €14.8m, contracting 47% compared to the fourth quarter of 2017.

This situation, affecting the company’s business model, led to the reorganization announced on November 23, 2018: a departure plan covering around 100 people, focused on international operations, has been rolled out with a view to reducing the resources consumed by the marketing and production structures, in line with current market capacity. This plan will be finalized during the first quarter of 2019.

Commercial Drone revenues (40% of Group revenues)

The commercial drone subsidiaries generated total revenues of €43.6m in 2018, up 5%.

Sales of software and services (Pix4D, Airinov) are up 24% year on year, to €25.2m, driven by the robust performances of Pix4D (drone imaging analysis software), which has extended its offering and its international organization, with a presence already established in Spain and Germany and underway in Japan, following on from its structures in China and the US. The development of Airinov (drone imaging services and data analysis for precision farming) has plateaued for the moment: the adoption of new technologies to measure crop health and productivity is following the agricultural sector’s pace for modernization. As announced in November 2018, Parrot Airsupport was put on standby in the fourth quarter.

Equipment revenues (senseFly and Micasense) came to €18.4m, with this year on year contraction (-14%) reflecting the delays with launches for the next generation of fixed-wing drones, which was carried out in the fourth quarter. Making a lower contribution, sensor sales continued to progress throughout the year. In the fourth quarter, the performance for equipment sales was able to be normalized, with revenues up 73% from the previous quarter.

On the Defense and Security market, following a phase to research and understand expectations, headed up by the new experts recruited, promising initial trials have been carried out in various countries and the companies (Parrot Drones, Sky Hero and Planck Aerosystems) are delivering their first orders and will gradually ramp up their commercial activities.

Krusty Geeza · Mar 22, 2019

How does the sale of the automotive production arm feature in all of this? Was that pure profit coming in, or was that something else? That's the part I don't understand. I get that drone sales have dropped in the consumer market around the world as nearly everybody has one already. A local retailer here has mentioned to me that the drone bubble burst about 12 months ago thanks to over-saturation from DJI. It was a slow market to start with, then went galloping off & now has slowed severely in units being sold to the public. Apparently there are warehouses with stock sitting on shelves that can't easily be moved!

Thanev · Mar 22, 2019

If Parrot needs to move out a few units at clearance prices,I would buy a couple just for parts.
Wait a minute...they have no way to ship to Canada.
Cancel.

pmh1nic · Mar 22, 2019

Krusty Geeza said:
How does the sale of the automotive production arm feature in all of this? Was that pure profit coming in, or was that something else? That's the part I don't understand. I get that drone sales have dropped in the consumer market around the world as nearly everybody has one already. A local retailer here has mentioned to me that the drone bubble burst about 12 months ago thanks to over-saturation from DJI. It was a slow market to start with, then went galloping off & now has slowed severely in units being sold to the public. Apparently there are warehouses with stock sitting on shelves that can't easily be moved!

As far as the sale of automotive production, the only thing that makes sense to me is pure profit. Both divisions are technology driven and I would think there would be some technology sharing between the two divisions so I'm not sure why they couldn't coexist.

With regulations tightening and publicity regarding the tightening reported in the mainstream media my guess is the casual user is being driven out of the drone market, at least for drones in the price range above a couple of hundred dollars. Commercial applications appear to be the real area where consistent growth is possible.

MustangPhil · Mar 23, 2019

In an interview to the economy newspaper ‘Les Echo’ dated 20th March 2019, M. Seydoux said :

The degradation of Parrot’s (financial) results is due to our Anafi drone commercial failure on witch we placed high hopes and that was suppose to re-launch the company.
At launch time, press feed backs, influencers feed backs were good, but sales were not : We only did sale one third of what we expected...

In an other site, I found the actual sales numbers of the Anafi (lost the link but will post it here too when I find it).
In this same interview, he explains the r&d department will remain untouched, and a new business plan is going to be set for sales and deployment that will involve specialized circuits instead of general consumer distribution only.

Sorry for my poor translation here (I am not a specialist in economy and English is not my native language...)

—— the whole interview can be found online, I only translated this part ——

La dégradation des résultats de Parrot s'explique d'abord par l'échec commercial de notre drone Anafi, sur lequel nous avions fondé beaucoup d'espoirs et qui devait redonner un élan à l'entreprise. Au lancement, les retours de la presse et des influenceurs étaient bons, mais les ventes ont été mauvaises : nous n'avons vendu qu'un tiers de ce que nous avions prévu...

PikkuY · Mar 23, 2019

Hope Parrot will survive the financial difficulties.

MustangPhil · Mar 23, 2019

In another part of the interview, he says he can financially afford the 2 coming years, he thinks the drone market will be more oriented towards the professional and technophiles rather than the general consumer market.
His acquisition of Pix4D and the raise in the income in the slow-pace growing professional market makes him think the drone market is still worth for Parrot to remain involved in. That is why he personally bought the majority of the listed shares of Parrot as they where quoted low on the market.

The good thing of this strategic change, is the technophiles and professional market expects spare parts and available service. The bad idea of the beginning was to struggle with consumer goods resellers that had no idea of how to deal with a technical problem (except saying ‘no’ or ‘we will send it to Parrot, wait and see’ or ‘too complicated to sale in this cold part of the new world ;o)

The technophiles are ready to understand and go through the difficulties of the new regulations in the world of drone, as professionals will do (where the regular ‘joe’ just wanted to launch the toy from his garden whatever the new rules of the national laws or ... the ancien Newtonian rules of physics, electricity, magnetism...)

A positive point he mentions is the Anafi is part of the reduction of the product portfolio of the company (as well as new drones for agriculture), they wanted it a light drone portable with a nice camera ... and we have the Anafi.
He points the strategy by world leaders of drones (think DJI) that have lots of products in their range that will be hard to maintain in this changing world of consumer drones...

... that was my quick analysis of his interview, but I may be wrong, wait and see !

pmh1nic · Mar 23, 2019

I agree that the consumer market will be drained of casual users as the cost of entry into the world of flying drones (finding spaces to fly, registration of drones, getting permits to fly, etc.) increase. As for the Parrot Anafi, it faces the huge challenge of competing with the Goliath in the industry DJI. Unless certain features are extremely important to you (180 degree camera, super quiet, absence of no fly zones) and other aspects are of no concern (obstacle avoidance) there is no reason to chose the Anafi over the very well established DJI drones. Unless Parrot can somehow separate themselves with superior technology, customer service and/or reliability I think most buyers will go with the flow to DJI.

Dirk_ANAFI · Mar 23, 2019

MustangPhil said:
... makes him think the drone market is still worth for Parrot to remain involved in.
...

In addition by buying nearly half of the Parrot shares he keeps his hands on the financial ressources of Parrot SA, which are worth triple of these shares in the moment.

Kilrah · Mar 23, 2019

It's always seemed to me they were either a step behind or even doing everything backwards.

When there was a massive market for good quality, semipro level camera drones to take advantage of which was obvious 3-4 years ago they were all busy making toys. When toys got saturated they lifted their heads and went "oh, maybe we should make a good camera drone"... but that was now too late, and it came right when THAT market had shrunk and was becoming too much of a hassle for people to invest in. Ironically now would be the time to come up with toys that are safe and light enough to play with without worry - but it's too late as well.

They got their fair share of business with the toys, but they lost the camera drone market - when they could have had both.

Pretty ironic since back in 2015 I knew people who were in deals with Parrot and had told them exactly that.