At a glance, Fitbit's (NYSE:FIT) third quarter was outstanding. Revenue soared 168% year over year, non-GAAP gross margin increased sequentially, and the company boosted its outlook for the full year. But a closer look at some key metrics reveals a more comprehensive overview of the company's current state.

Fitbit products. Image source: Fitbit.

Average selling price is up
The most prominent bear case for Fitbit is that Apple's Apple Watch, along with increasing competition in the fitness wearable category from other brands, is poised to significantly impair Fitbit's growth prospects. Increasing competition, critics argue, will create an environment that could commoditize Fitbit's products, driving prices lower.

But this doesn't seem to be the case so far. While the competitive environment for Fitbit does seem to be more difficult in 2015 than it was in 2014, the company is actually holding up exceptionally well in pricing.

During Fitbit's third quarter, average selling prices, or ASPs, for its devices increased 33% year over year. Adjusting for currency changes, ASPs were up an impressive 41%. During the company's third-quarter earnings call, management credited the higher ASP to a product mix shift toward higher-priced products.

Gross margin is down compared to last year
While Fitbit's non-GAAP gross profit margin was up sequentially in Q3, it was down on a year-over-year basis. Adjusted for Forex, or FX, Fitbit's non-GAAP third-quarter gross profit margin was 50.8%, down from 53.9% in the year-ago quarter.

Management attributed the decline to lower margins on its new products. So, while Fitbit's ASPs may be on the rise, the company is delivering more value in order to drive this favorable shift to higher-priced products.

Notably, Fitbit expects to improve product unit cost and other related costs attributed to cost of goods sold. The company cites its sequential improvement in non-GAAP gross margin as evidence of an early payoff of these efforts.

Operating expenses are on the rise
Now here's the one metric that could be one of the key reasons for the stock's 26% decline during the past three months. Operating expenses have skyrocketed 206% compared to the year-ago quarter, handily exceeding the company's 168% revenue growth during this period.

Reflecting a market with increasing competition, Fitbit management said the biggest year-on-year increase in operating spending was sales and marketing -- particularly due to the launch of "significant media campaigns" in several markets.

This sharp increase in operating expenses should be viewed skeptically by investors. Fitbit can't sustain increasing its operating expenses so much faster than its revenue over the long haul. Further, this fast-rising metric raises a key question: Could this be an early sign of an intensely competitive environment that will require much higher levels of marketing spending per unit sold?

While Fitbit's ability to boost its ASP so significantly compared to last year is encouraging, the company's higher unit costs and rising operating expenses could eventually offset benefits of higher ASPs and even serve to convince investors the company's products lack pricing power. Investors should keep a close eye on these metrics as Fitbit matures.