Fitbit's Sales Plummet as Device's Popularity Fades

  • Fourth-quarter loss missed analysts’ average estimates
  • Company affirms annual forecast of $1.5 billion-$1.7 billion

Fitbit's 4Q Revenue Falls 19% as Popularity Fades

Fitbit Inc.’s fourth-quarter revenue fell 19 percent, hurt by fading consumer demand for its once-popular wearable fitness trackers.

Key Points

  • Revenue in the quarter -- which includes the holiday shopping season -- dropped to $573.8 million, the company said Wednesday in a statement. Fitbit in January had forecast sales of $572 million to $580 million. Before then, analysts had been predicting $736.4 million, the average of estimates compiled by Bloomberg.
  • The company’s loss excluding certain costs was 56 cents a share. Analysts on average had projected a loss of 53 cents a share.

The Big Picture

Chief Executive Officer James Park has been trying to prove that Fitbit is more than just a maker of trendy gadgets. The appeal of its wristbands has waned with consumers as the company faces competition from Apple Inc.’s higher-end watch and cheaper Chinese models, and last month Fitbit said it would eliminate 6 percent of its workforce. Park is seeking to diversify the business, including expanding into the smartwatch category and pushing its corporate-wellness offerings. His goal is to turn Fitbit into a digital-health company -- one that relies less on consumers and focuses on selling to the health-care industry -- but that strategy will take years to unfold.

The Details

  • Sales in the current period will be $270 million to $290 million, with the loss before some items projected to be 18 cents to 20 cents a share, Fitbit said. Analysts on average predicted first-quarter sales of $307.6 million and a loss of 16 cents. Fitbit reiterated the annual revenue forecast it gave in January, for $1.5 billion to $1.7 billion.
  • The company sold 6.5 million devices in the fourth quarter. That compares with more than 8.2 million in the quarter a year ago.
  • About two-thirds of the company’s total quarterly sales were generated in the U.S. Revenue in Europe, the Middle East and Africa increased 58 percent to $134 million; Asia declined 56 percent to $24.9 million and the Americas, excluding the U.S., fell 12 percent to $33.4 million.
  • The company disclosed it spent $23 million for intellectual property and employees from smartwatch startup Pebble Technology Corp. and $15 million for those assets from Vector Watch.
  • Fitbit shares were little changed in extended trading at 6:19 p.m. in New York after closing at $5.88. The stock has tumbled 64 percent in the past year.

CEO Comments

  • “We plan on expanding into smartwatches. If you look at any industry data in the market in terms of sell-through, we think entering this market will double our addressable market,” Park said in a conference call. “Our acquisition of Coin, Pebble and Vector have accelerated our efforts.”
  • “We are looking at developing form factors beyond the wrist to build a full ecosystem of products that support a consumer’s health-and-fitness journey,” he said.
  • “M&A will play a role in health-care opportunities,” Park said. “We’ll definitely be looking at M&A to accelerate our efforts.”
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