GoPro Inc (NASDAQ:GPRO) Earnings Model
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GoPro Modeling Approach
Revenue Modeling Approach: This model uses growth rates to project the total number of GoPro cameras sold each quarter, then applies an average revenue per unit (our proxy for average selling price) to arrive at total projected revenue. Expectation for new product launches are included in both the unit sales expectations and average selling price per unit.
Expense Modeling Approach: To estimate Cost of Revenue we use forecasts of Gross Margin percentage, and use ratios for each of the three operating expense line items: Research & Development, Sales & Marketing, and General & Administrative Expense. We use historic averages to estimate Other Income, and apply an effective tax rate to the future projected income to forecast the Provision for Income Tax.
Non-GAAP Adjustments: Historically GoPro’s non-GAAP adjustment have been primarily made up of Stock-Based Compensation (SBC) expense, Amortization of Intangibles, and Amortization of POP Displays. In the last few quarters management has also allocated some expenses to Restructuring Costs. We include We project SBC based on the ratio of SBC-to-Revenue, and Amortization based on historic averages.
Share Count Forecast: To forecast the future share count we calculate the historic change in share count, and apply similar changes in future periods.
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