GoPro (GPRO) is set to report Q1 earnings tonight after the close with a conference call to follow at 5pm ET.

Consensus stands at a loss of ($0.59) per share on Revenues of $169.55 (which would represent a decline of 31% y/y).

GPRO is coming off a dog shit quarter. The stock was halted ahead of the Q4 results last time they reported. At the time the co posted an 11 cent miss on the bottom line. Revenues were in line at $436.6 mln but the co had warned three weeks prior that it would be well below the original guidance of $500-550 mln. Guidance for Q1 and FY16 was not much better as the revenue outlook was well below expectations.

Q1 is expected to be yet another kitchen sink-type quarter but guidance is expected to hold up. 

Key Metrics

  • Gross Margin- Q4 Non-GAAP was 29.6% compared to 48.0% in the prior year. Q1 Guidance was for a rebound to the 35-37% area.
  • Inventory- Q4 inventory was $188 mln compared to $153 mln in the prior year. The co will need to maintain discipline here as it transitions to new products.
  • Units- GPRO shipped 2 mln capture devices in Q4, its second largbest quarter ever. But guidance for FY16 implied a slow down in unit growth. 2015 it shipped 6.6 mln units up 27% y/y.
  • ASPs- ASP's on all of Hero andHERO4 products, with the exception of the HERO4 Session, were up sequentially, as co did not experience any noticeable pricing pressure for these products during the quarter.

Guidance

  • Co issued downside guidance for Q1, seeing Q1 revs of $160-180 mln vs. then-$300.67 mln Capital IQ Consensus.
    • Non-GAAP gross margin is expected to be in the range of 35-37%.
  • Co issued downside guidance for FY16, seeing FY16 revs of $1.35-1.50 bln vs. then-$1.63 bln Capital IQ Consensus Estimate.

GPRO now trading -3.15% here at midday as price extends the recent down-trend to new multi-month lows now broken (11.00).