GoPro (GPRO) is set to report Q3 earnings tonight after the close with a conference call to follow at 5pm ET.

Current Capital IQ consensus stands at loss of ($0.34) per share on Revenue of $312.7 mln.

GPRO did reaffirm its guidance on September 19 which bodes well for the Q3 results. But the key will be for GPRO to reaffirm that it expects to return to profitability in Q4 and that the launch of Hero5 and Karma are beating expectations.

Key Metrics

  • Gross Margin- 2H16 is expected to be in the range of 39-41% as the uptick in marketing spend around the launch of its new products takes its toll. Q2 Gross Margin was 42.4%.
  • Units Shipped- Q2 saw an 8% increase in units shipped to 759,000.
  • Average Selling Price- ASPs increased 11% q/q and 14% y/y in Q2.
  • Inventory- With the roll over to a new product, inventory management remains key. Q2 Unit sell-thru was up approximately 10% sequentially and was more than 50% higher than sell-in for the second quarter in a row, resulting in an estimated 35% sequential reduction in channel inventory. Inventory declined $50 million, or 36%, from the first quarter to $90 million, the company's  lowest inventory level since the second quarter of 2014.

Guidance

  • On 9/19 reiterated that it expected FY16 revenue to fall in the range of $1.35-1.50 bln. Analysts have tweaked consensus numbers higher as it has moved to $1.38 bln from $1.33 bln according to Capital IQ.
  • 2H Non-GAAP Gross Margin is expected to be in the range of 39-41%.
  • GPRO has said it expects to return to profitability in Q4.