Customer concentration risk is what a company faces when a small number of customers generate a large portion of its revenue. The danger is straightforward: if one of those customers stops buying, cuts orders, demands better terms, or runs into financial trouble, the impact on the seller is outsized relative to losing a typical customer. For consumer-hardware makers that sell through retail, the "customers" of record are not the consumers who buy the gadget — they are the retailers and distributors that place the orders. A device company can have millions of end users and still be dependent on a few big-box chains.

Public companies are required to disclose material risks, and customer concentration is a standard risk factor when it applies. GoPro's fiscal 2025 Form 10-K, for the year ended December 31, 2025, both flags the risk and quantifies it precisely.

Our ten largest third-party customers, measured by the revenue we derive from them, accounted for 49%, 44% and 44% of our revenue in 2025, 2024, and 2023, respectively. One retailer accounted for 12%, 9% and 9.98% of our revenue for 2025, 2024, and 2023, respectively.— GoPro, Inc. Form 10-K (FY2025), source

The numbers do the work a vague risk factor cannot. In 2025, roughly half of GoPro's revenue (49%) came from just ten customers, and a single retailer represented 12% of the company's total revenue — up from 9% the prior year. The filing states plainly that "the loss of a small number of our large customers, or the reduction in business with one or more of our large customers, could" harm results. Because the company discloses the figures across three years, a reader can also see the trend: concentration rose in 2025 (from 44% to 49% for the top ten, and from 9% to 12% for the largest single retailer), meaning the business became more dependent on its biggest buyers, not less.

Why the threshold-level disclosure matters

Companies typically identify any single customer that exceeds a meaningful share of revenue — often around 10% — because at that level the relationship is material to the financial statements. GoPro's disclosure that one retailer crossed from 9% to 12% is exactly this kind of threshold event: a customer that was just under a commonly used materiality line moved clearly above it. For a reader, a named or quantified customer above 10% is a signal to ask what pricing power that customer holds, what happens to inventory and receivables if the relationship sours, and whether the seller's revenue would survive a single lost account. The same financial-statement note that discloses customer concentration usually also discloses concentration of credit risk in accounts receivable, since money owed by a few large customers carries the same single-point-of-failure exposure.

Retailers are the customer, consumers are the demand

A point that trips up readers of consumer-hardware filings is that the "customers" who create concentration risk are usually not the people using the product. GoPro sells through a network of retailers and distributors as well as directly through its own website, and its filing breaks the split out: in fiscal 2025, GoPro.com revenue "represented 26%" of total revenue and "retail accounted for 74%," compared with 25% and 75% the prior year. The retail share is where concentration lives, because that 74% flows through a relatively small set of large buyers — the same ten customers that make up 49% of total revenue. This structure means a hardware company can have broad consumer appeal and still be commercially dependent on whether a few purchasing departments place orders. It also means the company's revenue is exposed to retailer decisions — shelf space, inventory targets, promotional support — that are separate from end-consumer demand. A retailer can decide to carry fewer SKUs or reduce its inventory commitment for reasons that have nothing to do with how the product is selling.

Direct-to-consumer sales partially offset concentration, which is one reason hardware companies invest in their own storefronts and subscription channels. Revenue the company collects directly does not depend on a retail buyer's order, so a growing direct mix reduces reliance on the concentrated wholesale channel. GoPro's disclosure that its direct GoPro.com channel "includes subscription and service revenue" points at the same logic from another angle: subscription revenue recurs and is collected directly, making it both less concentrated and more predictable than wholesale hardware orders. A reader assessing concentration risk should therefore weigh it against the direct and recurring revenue mix — a company that is 50% concentrated in wholesale but building a direct subscription base is on a different trajectory than one whose concentration is rising while its direct channel stays flat.

Reading concentration in context

Concentration is a risk, not a verdict — large, stable retail relationships can be an asset, and many successful hardware businesses run through a handful of major channels. What the disclosure provides is the ability to size the dependence and watch it move. The disciplined approach is to read three things together: the percentage of revenue from the top customers, the percentage from the single largest, and the direction of both over the disclosed years. GoPro's filing gives all three, and the rising trend — top-ten share up to 49%, largest retailer up to 12% in 2025 — is precisely the kind of fact a risk-factor disclosure exists to surface. The same approach applies to any device maker: the concentration note turns a soft "we depend on key customers" warning into a number a reader can act on.