Fitbit Beats Estimates Amid Stronger Sales in U.S., Europeby
Second-quarter revenue gains 46%; maintains third quarter view
Shares rise as much as 7.9 percent in after-market trading
Fitbit Inc. beat analysts’ estimates for second-quarter earnings and reiterated its outlook for the current period, suggesting the new line of wearable fitness trackers are gaining traction in the U.S. and Europe, even amid increasing competition.
- Revenue grew 46 percent to $586.5 million in the second quarter from a year earlier, exceeding analysts’ average estimate of $578.2 million, the company said Tuesday.
- Profit excluding some costs was 12 cents a share in the period. Analysts on average had projected a profit of 11 cents.
- Fitbit’s earnings excluding some costs were $29.5 million in the quarter, compared with $51.3 million a year earlier.
- The shares gained as much as 7.9 percent to $14.20 in after hours trading.
The Big Picture
Fitbit is struggling to remain a leading player in the wearables market amid competition from Apple Inc. on the high end, China’s Xiaomi Corp. on the low end and multiple players in between. The San Francisco-based company’s market share fell to 24.5 percent in the first quarter of 2016 from 32.6 percent a year earlier, according to IDC. Its stock has lost more than half of its value this year as analysts and investors worry that Fitbit is a one-trick pony that can’t sustain its growth. Chief Executive Officer James Park has been trying to prove that Fitbit is more than just a fitness watch by doubling down in research and development and re-positioning the company as a digital health platform.
- Fitbit forecast third-quarter profit excluding certain costs of 17 cents to 19 cents a share, in line with analysts’ average estimate of 18 cents.
- Sales in the current quarter will be $490 million to $510 million. That compares with an average prediction of $501.9 million.
- The company maintained its full-year revenue forecast of $2.5 billion to $2.6 billion.
- Blaze and Alta, including related accessories, generated 54 percent of revenue in the period, compared with 50 percent in the first quarter.
- Fitbit sold 5.7 million connected health and fitness devices in the second quarter. That compares with 4.5 million devices sold a year earlier.