Fitbit shares sprint higher as revenues fall less than feared

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Shares in embattled fitness tracker maker Fitbit surged by as much as 13 per cent in extended trading, after it posted higher revenues and narrower losses than Wall Street had expected.
Fitbit’s revenues fell by more than 40 per cent to $299m in its quarter ending April 1, but were better than analysts’ consensus forecasts of $279m. While it saw 30 per cent growth in Europe, the Middle East and Africa, the US – its largest market – fell by more than half compared with a year earlier.

The maker of the Charge, Alta and Blaze wearable devices swung to net loss of $60m, from $11m in profits a year ago, against Wall Street’s estimate of $64m.

Unit sales of its connected trackers fell by more than a third to 3m year-on-year.

Shares in Fitbit, which have lost more than two thirds of their value in the last 12 months, were up about 9 per cent in late trading after its initial surge waned, at around $6.20.

“In the ten years since Fitbit was founded, we have transformed the wearables category with more than 63 million devices sold, over 50 million registered device users, and a global retail footprint of more than 55,000 stores. Underlying consumer demand has been better than our reported results in North America as we work down channel inventory levels, giving us increased confidence that we will enter the second half of 2017 with a relatively clean channel,” said James Park, Fitbit’s chief executive.

The results come a day after Apple signaled that its rival wearables business, including Apple Watch and various headphone accessories, had become a $6bn-a-year business.

Fitbit, which has said it is working on a new smartwatch to better compete with the Apple Watch, reiterated hat it expected full-year revenues to be $1.5-1.7bn, down by at least 22 per cent on last year’s $2.2bn sales. After a $200m cost-cutting plan that saw job cuts in recent months, operating expenses fell by 8 per cent in the latest quarter.

The San Francisco-based company launched a new heart-rate monitoring version of its Alta wristband during the quarter and expanded its app’s social networking capabilities.
“While 2017 remains a transition year, we have executed on our restructuring plan and are focused on positioning the company for the next stage of growth within wearables and connected health,” Mr Park said.

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