Fitbit Beats Estimates Amid Stronger Sales in U.S., Europe

  • Second-quarter revenue gains 46%; maintains third quarter view
  • Shares rise as much as 7.9 percent in after-market trading

The Road Ahead for Fitbit

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.

Key Points

  • 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.

The Detail

  • 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.

Before it's here, it's on the Bloomberg Terminal.