Fitbit Earnings: What to Watch

May 3, 2017

Fitbit Inc., the wearable fitness device maker, is scheduled to report first-quarter results after the close of trading Wednesday. Here’s what you need to know:

EARNINGS FORECAST: Fitbit is expected to report a loss adjusted to exclude certain items of 26 cents a share, according to analysts surveyed by FactSet, compared with a profit of 5 cents a share a year ago.

REVENUE FORECAST: Revenue is expected to come in at $280 million, according to FactSet, compared with $505.4 million a year earlier.


WHAT TO WATCH:

SALES SLUMP: Expectations are tamped way down following an uninspiring holiday season. In addition, in January, the company said it would cut 6% of its workforce, or about 110 workers, to increase efficiency. After such a drastic turn of events over the last year, observers of the company will be looking for any signs of renewed sales vigor.

SMARTWATCH LAUNCH: The company is expected to introduce a smartwatch this year. While Fitbit has been relatively quiet about the project, there have been reports of production snafus and design issues that have led to delays, which underline longstanding concerns around whether Fitbit can take on Apple Inc.’s smartwatch.

PRODUCT PIPELINE: A main question that has dogged Fitbit is how it can turn its accessories into must-have products. It has pushed deeper into health tracking with the March unveiling of the Fitbit Alta HR, an upgrade to its Alta fitness tracker that includes heart-rate tracking and sleep monitoring. But questions remain over whether Fitbit—and the rest of the wearable tech market—is destined to remain a “nice to have.”

During the first quarter of 2017, the fitness segment posted a revenue decline of 3% driven by lower volume in basic activity trackers partially offset by growth in our advanced wearables with GPS. Gross and operating margins increased year-over-year to 56% and 13%, respectively, resulting in an 11% growth in operating income. During the first quarter, we launched the Forerunner 935, our most advanced multisport watch with performance monitoring tools and introduced the vívosmart 3, an ultra-slim smart activity tracker with wrist based heart rate and innovative all-day stress tracking. While the market for basic activity trackers has matured rapidly over the past year, we continue to see opportunities within the advanced wearable with GPS category and are confident in our product roadmap for the remainder of 2017.

Fitbit reported quarterly results and revenue that beat analysts' expectations on Wednesday.

• Loss per share: 8 cents vs. 15 cents expected, according to Thomson Reuters
• Revenue: $353.3 million vs. $341.6 million expected, according to Thomson Reuters

In the year-ago period, Fitbit reported earnings of 12 cents a share on revenue of $586.5 million.

The company said it sold 3.4 million devices during the quarter, about in line with the 3.47 million that analysts had expected, according to a StreetAccount consensus estimate.

The stock initially gained more than 8 percent in after-hours trading. The stock pared some of its early gains, but was last still trading more than 6 percent higher.

Co-founder and CEO James Park said better-than-expected demand led to higher sales and inventory reduction.

"Our smartwatch, which we believe will deliver the best health and fitness experience in the category, is on track for delivery ahead of the holiday season and will drive a strong second half of the year," Park said in a statement.

In order to keep pace with competitors such as Apple, Fitbit's research and development team is exploring the medical sector . The company said it is working on tools to help diagnose and monitor sleep apnea.

Fitbit earnings: How many Ionic smartwatches were under Christmas trees?

Feb 25, 2018

Holiday quarters are always crucial for product manufacturers, but the past one was especially important for Fitbit Inc.

In an earnings report Monday afternoon, investors will find out how strong demand was for the Fitbit Ionic, the first full-fledged smartwatch from the wearables leader. The stakes are high, as Fitbit is in the midst of revamping its product lineup to focus more on watches and less on the basic trackers that made its name. The Ionic is its initial attempt at doing so, and the holiday period marked the first full quarter that the watch was available.

Opinions are split on what demand looked like for the Ionic as well as Fitbit’s broader slate of products during the holiday-shopping season.

“With more favorable product launch timing compared to last year, products that are compelling for Fitbit’s core market, and solid sell-through during the holiday, we are incrementally more positive heading into the Q4 report,” Wedbush analyst Alicia Reese wrote, though she’s still concerned about “significant declines in devices sold year-over-year.”

Reese estimates that the company sold 5.3 million devices during the quarter, down 18% from a year earlier. She also predicts that the average selling price rose slightly, to $111 from $109. She rates Fitbit shares at neutral and has a $6.50 price target.

Earnings: Analysts tracked by FactSet expect the company to break even on a per-share basis while posting a net loss of $1.1 million. According to Estimize, the average estimate calls for 2 cents in earnings per share. In the prior December quarter, the company reported a 56-cent loss. The company’s outlook called for a net loss per share of 1 to 3 cents.

Revenue: The average revenue estimate, according to FactSet, calls for $588.1 million in revenue, up from $573.8 million a year earlier. Estimize projects $593.4 million, and Fitbit’s outlook called for $570 million to $600 million.

What to watch for

Fitbit has been making a bigger push into the health ecosystem, so it will be important to look at how the company’s new ventures in this area are affecting the financials.

One key topic here will be Fitbit’s recent announcement that it plans to acquire Twine Health, a company with a coaching platform that’s aimed at people with chronic conditions, including diabetes and hypertension. Fitbit says the company makes it “easy for care teams of providers, coaches, friends and family to collaborate on care plans.”

Fitbit didn’t disclose the terms of the acquisition at the time of the announcement, but it will be interesting to hear the company’s financial outlook for the product as well as how it plans to integrate Twine into its existing suite of products and services.

The Twine purchase plays into Fitbit’s overall strategy of relying less on device sales to consumers by appealing more to health insurers and providers. Investors will want data and commentary on how some of the more established ventures in this area are going.

SAN FRANCISCO--(BUSINESS WIRE)--Fitbit, Inc. (NYSE:FIT), the leading global wearables brand, today reported revenue of $571 million, GAAP net loss per share of $(0.19), non-GAAP net loss per share of $(0.02), GAAP net loss of $(46) million, non-GAAP net loss of $(5) million, cash flow from operations of $52 million and free cash flow of $25 million, for its fourth quarter of 2017.

For the full-year 2017, Fitbit reported revenue of $1.6 billion, GAAP net loss per share of $(1.19), non-GAAP net loss per share of $(0.26), GAAP net loss of $(277) million, non-GAAP net loss of $(61) million, cash flow from operations of $61 million and free cash flow of $(25) million.

Fourth Quarter 2017 Financial Highlights

• Sold 5.4 million wearable devices. Average selling price increased 20% to $102 per device driven by adding Fitbit IonicTM, our smartwatch, to device mix.
• APAC grew 56% to $39 million, Other America’s revenue grew 40% to $47 million, EMEA revenue grew 16% to $155 million, and U.S. revenue decreased 13% to $330 million. International revenue was $241 million, representing 42% of revenue.
• New devices Fitbit IonicTM, Alta HRTM and Fitbit Aria 2TM and accessory Fitbit Flyer, represented 36% of revenue.
• GAAP gross margin was 43.6%, and non-GAAP gross margin was 44.2%.
• GAAP operating expenses represented 46.8% of revenue, and non-GAAP operating expenses represented 42.8% of revenue.

First Quarter 2018 Guidance

• We expect limited revenue from new product introduction. With consumer demand shifting towards smartwatches, we expect revenue to decline approximately (20%) to (15%) year over year and to be in a range of $240 million to $255 million.
• Non-GAAP basic net loss per share in the range of ($0.21) to ($0.18).
• Capital expenditures as a percentage of revenue of approximately 8%.
• We expect free cash flow to decline less than revenue, as receivables turn into cash receipts and less overhead is required to support the growth in inventory, and anticipate free cash flow of approximately $(25) million.
• Effective non-GAAP tax rate of approximately 40%.
• Stock-based compensation expense of approximately $26 million and basic share count of approximately 240 million.

Full Year 2018 Guidance

• We expect our device mix to continue to shift towards smartwatches over the course of the year. We expect to grow Fitbit Health Solutions and increase premium subscribers, but this growth will be relatively immaterial to wearable device revenue. We extrapolated the demand trend forecasted in the first quarter 2018 for the full year and expect revenue to be approximately $1.5 billion.
• We expect device mix shift and fixed cost deleveraging to negatively impact gross margins, partially offset by operating efficiencies.
• We expect to drive operating expenses 7% lower, to a target of $740 million.
• Capital expenditures as a percentage of revenue of approximately 3.5%.
• We expect free cash flow to decline less than revenue and expect to breakeven for 2018. Guidance excludes the benefit of an expected $80 million tax refund payment.
• We expect effective non-GAAP tax rate to be volatile driven by geographic mix of revenue, tax credits, and shift to profitability.
• Stock-based compensation expense of approximately $110 million and basic/diluted share count of approximately 248/267 million.

Fitbit stock gains after earnings beat but second-quarter outlook falls short

The company's net loss for the first quarter widened to $80.9 million from $60.1 million a year earlier. That amounted to a 34-cent loss in per-share earnings, compared with a 27-cent loss per share in the year-ago period. On an adjusted based, the loss per share of 17 cents exceeded expectations for a 20-cent loss per share, according to FactSet. A year ago, the company reported a 15-cent adjusted loss per share. Revenue fell to $247.9 million from $298.9 million and came in slightly ahead of estimates for $247.3 million.

Fitbit said that it sold 2.2 million devices during the first quarter. A year earlier, it sold 3 million.

The company said it expected revenue of $275 million to $295 million for the second quarter and an adjusted loss per share of 23 cents to 27 cents. Analysts had been expecting second-quarter revenue of $310 million and an adjusted per-share loss of 12 cents.

"We expect results to be impacted by the reduced demand by the channel for trackers, partially offset by an increase in smartwatch revenue, driven primarily by Versa sales," Fitbit said in its release. "We expect smartwatches to grow as a percentage of revenue, but our overall mix to continue to be skewed towards trackers."

In the second quarter, analysts expect Fitbit’s revenue to fall 19.2% YoY (year-over-year) to $285.4 million from $353.3 million, and its non-GAAP EPS to fall significantly YoY to -$0.24 from -$0.08.

Fitbit has beaten analysts’ earnings estimates in three of the last four quarters. It beat analysts’ Q1 2018 earnings estimate of -$0.20 by 15% with EPS of -$0.17, and their Q3 2017 estimate of -$0.03 by 66.7% with EPS of -$0.01.

In Q2 2017, analysts expected Fitbit to post EPS of -$0.15. Instead, it reported EPS of -$0.08, 46.7% higher than the estimate. In Q4 2017, its EPS were -$0.02, below analysts’ estimate of $0.00.

Fitbit stock jumps after wearables pioneer posts first profit in two years

Published: Oct 31, 2018 5:51 p.m. ET

Fitbit Inc. shares soared more than 9% in after-hours trading Wednesday, after the wearables pioneer posted a surprise adjusted profit for its third quarter. It was the first time in two years that Fitbit generated positive adjusted earnings.

The company generated adjusted earnings per share of 4 cents for the quarter on revenue of $393.6 million. Analysts surveyed by FactSet were expecting a per-share loss of 1 cent and revenue of $381.3 million. Revenue increased slightly on a year-over-year basis, following many years of declines.

Fitbit's earnings surprise reflected progress in the company’s cost-cutting efforts, with operating expenditures down 17% during the quarter. Management also highlighted strong performance on the product side as the Versa smartwatch continues to sell well. Chief Executive James Park said that the company is seeing “good momentum” for its new Charge 3 fitness tracker, which began to ship during the quarter.

International revenue grew 10% in the period, driven by strength in Europe, the Middle East and Africa. Park said he sees “very positive” demand for the Charge 3 in the region.

Heading into the holiday season, Fitbit expects its device mix to shift a bit more toward fitness trackers, owing to the recent introduction of the Charge 3, which revived the company’s tracker offerings and wasn’t available for a good chunk of the third quarter. Management anticipates that mix shift to deliver a “slight uplift” to gross margins.

Overall, Fitbit forecasts 7 cents in adjusted earnings per share for the December quarter, above the 5 cents modeled by analysts.

Fitbit ended the quarter with $623 million in cash and marketable securities on its balance sheet, just over half of its market value as of Wednesday’s close. Chief Financial Officer Ron Kisling told MarketWatch that while the company has adequate working capital, it’s “important to preserve opportunities to invest in growth.” The company sees potential to bolster its services business and delve further into the health ecosystem.

Fitbit found profit in holiday season, but disappointing outlook clouds earnings

Feb 27, 2019

The wearables manufacturer posted net income of $15.4 million, or 6 cents a share, compared with a loss of $45.5 million, or 19 cents a share, in the year-earlier period. After adjusting for stock-based compensation and other effects, Fitbit claimed earnings of 14 cents a share, compared with an adjusted loss of 2 cents a share a year ago. Revenue was near flat, at $571.2 million relative to $570.8 million in the year-earlier quarter. Analysts surveyed by FactSet expected Fitbit to earn an adjusted 7 cents per share on revenue of $569 million.

Chief Executive James Park told MarketWatch that this latest quarter was the first since 2016 in which the company posted an increase in devices sold. Fitbit will look to better monetize its active user base, which grew 9% in 2018, including through a new paid software offering that is expected to launch in the second half of the year.

For the current quarter, Fitbit expects an adjusted loss per share of 22 cents to 24 cents on revenue of $250 million to $268 million. That is well lower than analysts’ estimates, which calls for a loss of 15 cents per share on revenue of $272 million, according to FactSet. For the full year, Fitbit projects revenue of $1.52 billion to $1.58 billion, compared with the FactSet consensus of $1.57 billion.

The company ended the quarter with $723.4 million in cash and marketable securities on its balance sheet, roughly 42% of Fitbit’s market value as of Wednesday’s close.

Fitbit Reports First Quarter Results for the Three Months Ended March 30, 2019
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• Revenue of $272 million, GAAP Loss Per Share of $(0.31), Non-GAAP Loss Per Share of $(0.15)
• Revenue increased 10% year-over-year driven by both tracker and smartwatch growth

SAN FRANCISCO--(BUSINESS WIRE)-- Fitbit, Inc. (NYSE:FIT) today reported revenue of $272 million, GAAP net loss per share of $(0.31), non-GAAP net loss per share of $(0.15), GAAP net loss of $(79) million, non-GAAP net loss of $(38) million, cash flow from operations of $(68) million and free cash flow of $(74) million for its first quarter of 2019.

First Quarter 2019 Financial Highlights
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• Devices sold increased 36% year-over-year to 2.9 million. Average selling price decreased 19% year-over-year to $91 per device due to the introduction of more affordable devices, lowering the barriers to joining our community of active users.
• U.S. revenue represented 50% of total revenue or $135 million, down 3% year-over-year.
• International revenue represented 50% of total revenue and grew 26% to $137 million: EMEA revenue grew 35% to $87 million; APAC revenue grew 24% to $34 million and Americas excluding U.S. revenue declined 5% to $15 million (all on a year-over-year basis).
• GAAP gross margin was 32.9% and non-GAAP gross margin was 34.2%. Both GAAP and non-GAAP gross margin were negatively impacted by the growing mix of smartwatch revenue and lower yields from our product launch.

Second Quarter 2019 Guidance
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• We expect an increase in devices sold and a decline in average selling price, each year-over-year. We expect revenue to grow 2% to 7% year-over-year and to be in the range of $305 million to $320 million.
• We expect non-GAAP gross margin to be approximately 36% to 38%.
• We expect non-GAAP basic net loss per share in the range of $(0.20) to $(0.17).
• We expect adjusted EBITDA to be in the range of a loss of $(59) million to $(47) million.

Google to acquire Fitbit, valuing the smartwatch maker at about $2.1 billion

Nov 01 2019

Key Points
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• Google parent company Alphabet will buy Fitbit, according to an announcement Friday.
• The acquisition pits Alphabet against fellow tech giant Apple in the wearable fitness tracking space.
• Google is paying $7.35 per share in cash for Fitbit, valuing the company at about $2.1 billion.