Home > Latest News > EXCLUSIVE:Did Steel Series Contribute To GN Jabra’s Problems? Shock Financials Reveal How Bad Their Consumer Business Really Was

EXCLUSIVE:Did Steel Series Contribute To GN Jabra’s Problems? Shock Financials Reveal How Bad Their Consumer Business Really Was

The collapse of Jabra’s consumer business shocked many in the industry, with an investigation by ChannelNews revealing that the A$1.81 billion dollar acquisition of Steel Series headphones has played a key role in the decision by the Danish Company to exit the consumer market with questions now being raised about the impact on their enterprise business.

The Denmark-based GN purchased the SteelSeries business from Axcel, a Nordic private equity firm, in a deal saw them borrow 50% of the acquisition cost while paying cash for the rest with questions now being asked about the impact the deal will have on the business going forward as it appears that the sale of Steel Series headphones is failing to deliver profits to support the acquisition price.

Back in 2022 executives at the Jabra Company GN Company were calling SteelSeries a “new growth engine,”, now it’s all gone pear shaped with the Company that tipped $902 million in cash into the acquisition after borrowing another $902 million rhe business only managed to deliver a 6% return from their combined gaming and consumer headphone business in 2023 Vs 27.6% in their hearing division and 32.7% in their enterprise headphone business.

The big question now is what impact the failed deal will have on their other enterprise headphone business which along with their hearing business is the growth engine for the Company.

Local CEO of GN Jabra David Piggott (seen below) has failed to return our calls.

Staff who have contacted us claim that there are real concerns about the closure of the consumer business and the impact on jobs in the long term as the Companies Enterprise business struggles.

Back in 2021/ 2022 COVID was delivering record sales for retailers in the gaming market and GN management was wooed by the SteelSeries’ “growth profile and margin structure,” according to their announcements at the time.

What they were punting on was to cash in on demand for gaming hardware which they tipped would grow in the mid-term of between 7 to 8% percent per year.”

They even predicted that SteelSeries would deliver “strong growth in revenue and EBITA” going forward.

Now they are left wondering how to pay for the deal.

In 2023 profits from their combined consumer buds and gaming headphone business that included their expensive Steel Series products was A$50M which if you take into account interest and capital repayment on their $902M loan to acquire the business they are going to spend decades paying off the debt without the benefit of their consumer headphone business that was struggling to deliver a return for the Company.

Overall SteelSeries gaming was up 16% YOY with the business introducing a new line of microphones in late 2023.

SteelSeries was also 71% of the total consumer/ gaming business for Q4, CY 2023 with consumers switching off the purchase of the pricy Jabra headphones in retail stores in Australia.

The product that lost traction in 2023 was the Jabra True Wireless Elite headphone which consumer were claiming were “overpriced”.

As for the Jabra Enterprise business revenue was down 9% in Q4 2023 and has fallen further in 2024.

Consumer revenue in the last quarter of 2023 was down 14% from a fall in 2022 of 37%.

The Company also admitted that they slashed marketing budgets in 2023 when their competitors were increasing their advertising and promotion spend.

Organic growth in their consumer market was -8%.

The business has not said how many people they plan to lay off globally or in Australia.

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