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Share Name | Share Symbol | Market | Type |
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Fitbit Inc | NYSE:FIT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 6.93 | 0 | 01:00:00 |
Grew Active Users 9% to 27.6 Million, Grew Device Shipments in Q4’18
Fitbit, Inc. (NYSE:FIT), today reported revenue of $571 million, GAAP net income per share of $0.06, non-GAAP net income per share of $0.14, GAAP net income of $15 million, non-GAAP net income of $36 million, cash flow from operations of $108 million and free cash flow of $96 million for its fourth quarter of 2018.
For the full year 2018, Fitbit reported revenue of $1.51 billion, GAAP net loss per share of $(0.76), non-GAAP net loss per share of $(0.20), GAAP net loss of $(186) million, non-GAAP net loss of $(49) million, cash flow from operations of $113 million and free cash flow of $60 million. Excluding a tax refund payment, free cash flow was ($12) million.
“I’m proud of our performance this year - our results demonstrate that our strategy is the right one, placing us on a path back to growth and profitability. We grew our active users 9% to 27.6 million, became the #2 player in the smartwatch category in the U.S., and grew the number of devices sold in the fourth quarter,” said James Park, co-founder and CEO. “In 2019 we’re committed to offering more affordable devices with engaging health and fitness features, making the health benefits of being on Fitbit even more accessible. As a result, we are forecasting active users, devices sold, and revenue to grow in 2019. We expect our Fitbit Health Solutions revenue growth to accelerate to approximately $100 million and to grow non-device consumer revenue.”
Fourth Quarter and Full Year 2018 Financial Summary
For the Three Months Ended For the Twelve Months Ended In millions, except percentages and per share amountsDecember 31,2018
December 31,2017
December 31,2018
December 31,2017
GAAP Results Revenue $ 571.2 $ 570.8 $ 1,512.0 $ 1,615.5 Gross Margin 38.0 % 43.6 % 39.9 % 42.8 % Net Income (Loss) $ 15.4 $ (45.5 ) $ (185.8 ) $ (277.2 ) Net Income (Loss) Per Share $ 0.06 $ (0.19 ) $ (0.76 ) $ (1.19 ) Non-GAAP Results Gross Margin 38.7 % 44.2 % 40.9 % 43.4 % Net Income (Loss) $ 36.3 $ (4.7 ) $ 48.8 $ (61.1 ) Net Income (Loss) Per Share $ 0.14 $ (0.02 ) $ (0.20 ) $ (0.26 ) Adjusted EBITDA $ 49.6 $ 22.5 $ (31.4 ) $ (52.2 ) Devices Sold 5.6 5.4 13.9 15.3For additional information regarding the non-GAAP financial measures, see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
Fourth Quarter 2018 Financial Highlights
Full Year 2018 Financial Highlights
Full Year 2018 Operational Highlights
First Quarter 2019 Guidance
Full Year 2019 Guidance
For additional information regarding the non-GAAP financial measures presented above, see “Non-GAAP Financial Measures” below.
Webcast and Conference Call Information
Fitbit will host a conference call today at 5:00 p.m. Eastern Time, 2:00 p.m. Pacific Time, to discuss its results. Investors may access a live webcast of the call through the Investor section of Fitbit’s website at investor.fitbit.com. The call can also be accessed by dialing (800) 458-4121 or (929) 477-0324, access code 3270591. A replay of the call will be archived on Fitbit’s website for the following six months.
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding our outlook for the first quarter of 2019 and full year 2019; growth of the global wearables market; expected growth in active users; expected device mix; future opportunities in health coaching and wellness solutions, including the expected growth of our Fitbit Health Solutions business; growth in non-device consumer revenue; and trends in device sales, revenue, average selling price, operating expenses, capital expenditures, free cash flow, gross margins, non-GAAP gross margins, non-GAAP net (loss) income per share, stock-based compensation expense, adjusted EBITDA, effective non-GAAP tax rate and basic/diluted share count. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including: the effects of the highly competitive market in which we operate, including competition from much larger technology companies; our ability to anticipate and satisfy consumer preferences in a timely manner; our ability to successfully develop and timely introduce new products and services or enhance existing products and services; retail and customer acceptance of existing and new products; any inability to accurately forecast consumer demand and adequately manage our inventory; our ability to ship products on the timelines we anticipate and unexpected delays; our ability to detect, prevent or fix quality issues in our products or services; uncertain ability to retain employees; our reliance on third-party suppliers, contract manufacturers, and logistics providers, and our limited control over such parties; delays in procuring components and product from these third parties or their suppliers; the ability of third parties to successfully manufacture and ship in a timely manner quality products; seasonality; product liability issues, security breaches or other defects, which may adversely affect product performance, our reputation and brand awareness and overall market acceptance of our products and services; ability to integrate acquired technologies and employees into our operations, particularly in new geographies; warranty claims; the fact that the market for trackers and wearable devices is relatively new and unproven; the ability of our channel partners to sell our products; litigation and related costs; privacy; the impact of changes in tax law; the impact of tariffs; and other general market, political, economic and business conditions.
Additional risks and uncertainties that could affect our financial results are included under the caption “Risk Factors” in our Annual Report on Form 10-K for the full year ended December 31, 2017, and our most recently filed Quarterly Report on Form 10-Q. Additional information will also be set forth in our Annual Report on Form 10-K for the full year ended December 31, 2018. All forward-looking statements contained herein are based on information available to us as of the date hereof and we do not assume any obligation to update these statements as a result of new information or future events.
Disclosure of Material Information
Fitbit announces material information to its investors using SEC filings, press releases, public conference calls and on its Investor Relations page on the company’s website at http://investor.fitbit.com.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures in this press release: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP income (loss) before income taxes, non-GAAP net income (loss), non-GAAP diluted net income (loss) per share, free cash flow, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, adjusted EBITDA, and effective non-GAAP tax rate. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.
We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.
There are limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of certain items, specifically stock-based compensation expense, depreciation, amortization of intangible assets, impairment of equity investment, interest income, net, and the related income tax effects of the aforementioned exclusions, that may be recurring and will be reflected in our financial results for the foreseeable future. Our adjustments to our non-GAAP financial measures previously included the exclusion of litigation expense related to matters with Aliphcom, Inc. d/b/a Jawbone. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
Guidance for non-GAAP financial measures excludes stock-based compensation, amortization of acquired intangible assets, and tax effects associated with these items. We have not reconciled guidance for non-GAAP financial measures to their most directly comparable GAAP measures because certain items that impact these measures are uncertain, out of our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
The following are explanations of the adjustments that are reflected in one or more of our non-GAAP financial measures:
About Fitbit, Inc. (NYSE: FIT)
Fitbit helps people lead healthier, more active lives by empowering them with data, inspiration and guidance to reach their goals. As the leading global wearables brand, Fitbit designs products and experiences that track and provide motivation for everyday health and fitness. Fitbit’s diverse line of innovative and popular products include Fitbit Charge 3™, Fitbit Alta HR™, Fitbit Alta®, Fitbit Ace™, Fitbit Flex 2®, and Fitbit Zip® activity trackers, as well as the Fitbit Ionic™ and Fitbit Versa™ smartwatches, Fitbit Flyer™ wireless headphones and Fitbit Aria 2™Wi-Fi Smart Scale. Fitbit products are carried in over 39,000 retail stores and in 87 countries around the globe. Powered by one of the world’s largest social fitness networks and databases of health and fitness data, the Fitbit platform delivers personalized experiences, insights and guidance through leading software and interactive tools, including the Fitbit and Fitbit Coach apps, and the Fitbit OS for smartwatches. Fitbit Health Solutions develops health and wellness solutions designed to help increase engagement, improve health outcomes, and drive a positive return for employers, health plans and health systems.
Fitbit and the Fitbit logo are trademarks or registered trademarks of Fitbit, Inc. in the U.S. and other countries. Additional Fitbit trademarks can be found at www.fitbit.com/legal/trademark-list. Third-party trademarks are the property of their respective owners.
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FITBIT, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months EndedDecember 31, 2018
December 31, 2017
December 31, 2018
December 31, 2017
Revenue $ 571,199 $ 570,756 $ 1,511,983 $ 1,615,519 Cost of revenue 354,272 322,159 908,404 924,618 Gross profit 216,927 248,597 603,579 690,901 Operating expenses: Research and development 75,946 90,541 332,169 343,012 Sales and marketing 104,518 145,600 344,091 415,042 General and administrative 25,516 31,119 116,627 133,934 Total operating expenses 205,980 267,260 792,887 891,988 Operating income (loss) 10,947 (18,663 ) (189,308 ) (201,087 ) Interest income, net 2,209 1,197 7,808 3,647 Other income (expense), net (276 ) 2,661 (2,642 ) 2,796 Income (loss) before income taxes 12,880 (14,805 ) (184,142 ) (194,644 ) Income tax expense (benefit) (2,492 ) 30,665 1,687 82,548 Net income (loss) $ 15,372 $ (45,470 ) $ (185,829 ) $ (277,192 ) Net income (loss) per share: Basic $ 0.06 $ (0.19 ) $ (0.76 ) $ (1.19 ) Diluted $ 0.06 $ (0.19 ) $ (0.76 ) $ (1.19 ) Shares used to compute net income (loss) per share: Basic 249,973 237,421 244,603 232,032 Diluted 260,399 237,421 244,603 232,032FITBIT, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
December 31, 2018
December 31, 2017
Assets Current assets: Cash and cash equivalents $ 473,956 $ 341,966 Marketable securities 249,493 337,334 Accounts receivable, net 414,209 406,019 Inventories 124,871 123,895 Income tax receivable 6,957 77,882 Prepaid expenses and other current assets 42,325 97,269 Total current assets 1,311,811 1,384,365 Property and equipment, net 106,286 104,908 Goodwill 60,979 51,036 Intangible assets, net 23,620 22,356 Deferred tax assets 4,489 3,990 Other assets 8,362 15,420 Total assets $ 1,515,547 $ 1,582,075 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 251,657 $ 212,731 Accrued liabilities 437,234 452,137 Deferred revenue 29,400 35,504 Income taxes payable 1,092 928 Total current liabilities 719,383 701,300 Long-term deferred revenue 7,436 6,928 Other liabilities 52,790 49,884 Total liabilities 779,609 758,112 Stockholders’ equity: Class A and Class B common stock 25 24 Additional paid-in capital 1,055,046 956,060 Accumulated other comprehensive loss (66 ) (9 ) Accumulated deficit (319,067 ) (132,112 ) Total stockholders’ equity 735,938 823,963 Total liabilities and stockholders’ equity $ 1,515,547 $ 1,582,075 FITBIT, INC. Condensed Consolidated Statements of Cash Flow (In thousands) (unaudited) Three Months Ended Twelve Months EndedDecember 31,2018
December 31,2017
December 31,2018
December 31,2017
Cash Flows from Operating Activities Net income (loss) $ 15,372 $ (45,470 ) $ (185,829 ) $ (277,192 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for doubtful accounts 19 87 56 7,893 Provision for inventory obsolescence 2,809 1,438 11,828 14,833 Depreciation 13,501 11,633 48,889 39,971 Write-off of property and equipment 218 — 7,731 5,250 Amortization of intangible assets 2,060 1,588 7,926 5,722 Amortization of issuance costs and discount on debt 475 74 785 951 Stock-based compensation 23,396 24,325 97,009 91,581 Deferred income taxes (858 ) 41,091 (2,548 ) 173,906 Impairment of equity investment — — 6,000 — Other (392 ) (208 ) (1,395 ) 216 Changes in operating assets and liabilities, net of acquisition: Accounts receivable (88,263 ) (145,115 ) (8,036 ) 63,784 Inventories 67,204 12,681 (12,860 ) 92,129 Prepaid expenses and other assets 2,558 12,393 125,914 (113,111 ) Fitbit force recall reserve (50 ) (121 ) (445 ) (789 ) Accounts payable 18,850 36,045 35,207 (86,115 ) Accrued liabilities and other liabilities 52,478 104,373 (11,978 ) 56,172 Deferred revenue 4,027 2,374 (5,622 ) (7,472 ) Income taxes payable (5,078 ) (1,666 ) 575 (3,488 ) Net cash provided by operating activities 108,326 55,522 113,207 64,241 Cash Flows from Investing Activities Purchase of property and equipment (12,706 ) (30,959 ) (52,880 ) (89,160 ) Purchases of marketable securities (104,684 ) (103,393 ) (353,948 ) (597,933 ) Sales of marketable securities 1,038 22,600 9,983 42,406 Maturities of marketable securities 75,918 121,949 433,594 622,525 Acquisition, net of cash acquired (2,250 ) — (19,253 ) (556 ) Equity investment — (6,000 ) — (6,000 ) Net cash provided by (used in) investing activities (42,684 ) 4,197 17,496 (28,718 ) Cash Flows from Financing Activities Repayment of debt — — (747 ) — Proceeds from issuance of common stock 9,829 5,118 21,470 19,011 Taxes paid related to net share settlement of restricted stock units (3,752 ) (3,572 ) (19,436 ) (14,376 ) Net cash provided by financing activities 6,077 1,546 1,287 4,635 Net increase in cash and cash equivalents 71,719 61,265 131,990 40,158 Effect of exchange rate on cash and cash equivalents — 20 — 488 Cash and cash equivalents at beginning of period 402,237 280,681 341,966 301,320 Cash and cash equivalents at end of period $ 473,956 $ 341,966 $ 473,956 $ 341,966 FITBIT, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except percentages and per share amounts) (unaudited) Three Months Ended Twelve Months EndedDecember 31, 2018
December 31, 2017
December 31, 2018
December 31, 2017
Non-GAAP gross profit: GAAP gross profit $ 216,927 $ 248,597 $ 603,579 $ 690,901 Stock-based compensation expense 2,183 2,423 7,312 5,312 Impact of restructuring — — — 37 Intangible assets amortization 1,853 1,516 7,189 5,473 Non-GAAP gross profit $ 220,963 $ 252,536 $ 618,080 $ 701,723 Non-GAAP gross margin (as a percentage of revenue): GAAP gross margin 38.0 % 43.6 % 39.9 % 42.8 % Stock-based compensation expense 0.4 0.3 0.5 0.3 Impact of restructuring — — — — Intangible assets amortization 0.3 0.3 0.5 0.3 Non-GAAP gross margin 38.7 % 44.2 % 40.9 % 43.4 % Non-GAAP research and development: GAAP research and development $ 75,946 $ 90,541 $ 332,169 $ 343,012 Stock-based compensation expense (13,330 ) (13,842 ) (57,188 ) (53,781 ) Impact of restructuring — — — (2,744 ) Non-GAAP research and development $ 62,616 $ 76,699 $ 274,981 $ 286,487 Non-GAAP sales and marketing expense: GAAP sales and marketing $ 104,518 $ 145,600 $ 344,091 $ 415,042 Stock-based compensation expense (3,730 ) (3,658 ) (14,726 ) (14,572 ) Impact of restructuring — — — (2,000 ) Intangible assets amortization (135 ) — (451 ) — Non-GAAP sales and marketing $ 100,653 $ 141,942 $ 328,914 $ 398,470 Non-GAAP general and administrative expense: GAAP general and administrative $ 25,516 $ 31,119 $ 116,627 $ 133,934 Stock-based compensation expense (4,153 ) (4,402 ) (17,783 ) (17,188 ) Litigation expense — (919 ) (765 ) (3,212 ) Impact of restructuring — — — (1,594 ) Intangible assets amortization (73 ) (71 ) (286 ) (248 ) Non-GAAP general and administrative $ 21,290 $ 25,727 $ 97,793 $ 111,692 Non-GAAP operating expenses: GAAP operating expenses $ 205,980 $ 267,260 $ 792,887 $ 891,988 Stock-based compensation expense (21,213 ) (21,902 ) (89,697 ) (85,541 ) Litigation expense — (919 ) (765 ) (3,212 ) Impact of restructuring — — — (6,338 ) Intangible assets amortization (208 ) (71 ) (737 ) (248 ) Non-GAAP operating expenses $ 184,559 $ 244,368 $ 701,688 $ 796,649 FITBIT, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except percentages and per share amounts) (unaudited) Three Months Ended Twelve Months EndedDecember 31, 2018
December 31, 2017
December 31, 2018
December 31, 2017
Non-GAAP operating income (loss) and income (loss) before income taxes: GAAP operating income (loss) $ 10,947 $ (18,663 ) $ (189,308 ) $ (201,087 ) Stock-based compensation expense 23,396 24,325 97,009 90,853 Litigation expense — 919 765 3,212 Impact of restructuring — — — 6,375 Intangible assets amortization 2,061 1,587 7,926 5,722 Non-GAAP operating income (loss) 36,404 8,168 (83,608 ) (94,925 ) Interest income, net 2,209 1,197 7,808 3,647 Other income (expense), net (276 ) 2,661 3,358 2,796 Non-GAAP income (loss) before income taxes $ 38,337 $ 12,026 $ (72,442 ) $ (88,482 ) Non-GAAP net income (loss) and net income (loss) per share: Net income (loss) $ 15,372 $ (45,470 ) $ (185,829 ) $ (277,192 ) Stock-based compensation expense 23,396 24,325 97,009 90,853 Litigation expense — 919 765 3,212 Impact of restructuring — — — 6,375 Impairment of equity investment — — 6,000 — Intangible assets amortization 2,061 1,587 7,926 5,722 Income tax effect of non-GAAP adjustments (4,481 ) 13,979 25,330 109,887 Non-GAAP net income (loss) $ 36,348 $ (4,660 ) $ (48,799 ) $ (61,143 ) GAAP diluted shares 249,973 237,421 244,603 232,032 Other dilutive equity awards 10,426 — — — Non-GAAP diluted shares 260,399 237,421 244,603 232,032 Non-GAAP diluted net income (loss) per share $ 0.14 $ (0.02 ) $ (0.20 ) $ (0.26 ) Free cash flow: Net cash provided by operating activities $ 108,326 $ 55,522 $ 113,207 $ 64,241 Purchases of property and equipment (12,706 ) (30,959 ) (52,880 ) (89,160 ) Free cash flow $ 95,620 $ 24,563 $ 60,327 $ (24,919 ) Net cash provided by (used in) investing activities $ (42,684 ) $ 4,197 $ 17,496 $ (28,718 ) Net cash provided by financing activities $ 6,077 $ 1,546 $ 1,287 $ 4,635 FITBIT, INC. Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except percentages and per share amounts) (unaudited) Three Months Ended Twelve Months EndedDecember 31, 2018
December 31, 2017
December 31, 2018
December 31, 2017
Adjusted EBITDA: Net income (loss) $ 15,372 $ (45,470 ) $ (185,829 ) $ (277,192 ) Stock-based compensation expense* 23,396 24,325 97,009 90,853 Litigation expense — 919 765 3,212 Impact of restructuring — — — 6,375 Impairment of equity investment — — 6,000 — Depreciation and intangible assets amortization 15,561 13,221 56,815 45,693 Interest income, net (2,209 ) (1,197 ) (7,808 ) (3,647 ) Income tax expense (benefit) (2,492 ) 30,665 1,687 82,548 Adjusted EBITDA $ 49,628 $ 22,463 $ (31,361 ) $ (52,158 ) Stock-based compensation expense: Cost of revenue $ 2,183 $ 2,423 $ 7,312 $ 5,312 Research and development 13,330 13,842 57,188 54,123 Sales and marketing 3,730 3,658 14,726 14,959 General and administrative 4,153 4,402 17,783 17,187 Total stock-based compensation expense* $ 23,396 $ 24,325 $ 97,009 $ 91,581
* A portion of stock-based compensation expense for the year ended December 31, 2017 was allocated to and included in "Impact of restructuring," thus explaining the difference between the total by function presented in this table compared to the amounts presented in the above tables.
FITBIT, INC. Revenue by Geographic Region (In thousands) (unaudited) Three Months Ended Twelve Months EndedDecember 31, 2018
December 31, 2017
December 31, 2018
December 31, 2017
United States $ 328,416 $ 330,227 $ 880,534 $ 944,052 Americas, excluding United States 44,545 46,674 101,282 116,330 Europe, Middle East, and Africa 149,503 155,090 384,196 440,135 APAC 48,735 38,765 145,971 115,002 Total $ 571,199 $ 570,756 $ 1,511,983 $ 1,615,519
View source version on businesswire.com: https://www.businesswire.com/news/home/20190227005783/en/
Investor Contact:
Tom Hudson, (415) 604-4106investor@fitbit.com
Media Contact:
Jen Ralls, (415) 722-6937PR@fitbit.com
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