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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Fitbit Inc | NYSE:FIT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.93 | 0 | 01:00:00 |
Fitbit, Inc. (NYSE:FIT) today reported revenue of $188 million, GAAP net income per share of $0.07, non-GAAP net loss per share of $(0.24), GAAP net income of $20 million, non-GAAP net loss of $(65) million, cash flow from operations of $(82) million, and non-GAAP free cash flow of $(86) million for its first quarter of 2020.
“Our mission to help people around the world get healthier has never been more important. The emergence of COVID-19 has underscored the critical role that Fitbit, as a trusted brand, can play in providing people with much-needed support throughout the COVID-19 crisis and beyond,” said James Park, co-founder and CEO. “While COVID-19 has impacted our business, and there continues to be uncertainty around consumer demand and the economy, we are moving quickly to develop innovative products and services that can help people during this time. We launched our most innovative tracker, Fitbit Charge 4, and with consumers looking for more support and guidance at home during this time, we provided a free 90-day trial and access to Premium content, resulting in a substantial increase in Premium subscribers.”
First Quarter 2020 Financial Summary
For the Three Months Ended
In millions, except percentages and per share amounts
April 4, 2020
March 30, 2019
GAAP Results
Revenue
$
188.2
$
271.9
Gross Margin
29.2
%
32.9
%
Net Income (Loss)
$
20.3
$
(79.5
)
Net Income (Loss) Per Share
$
0.07
$
(0.31
)
Non-GAAP Results
Gross Margin
32.0
%
34.2
%
Net Loss
$
(64.6
)
$
(38.1
)
Net Loss Per Share
$
(0.24
)
$
(0.15
)
Adjusted EBITDA
$
(75.6
)
$
(43.2
)
Devices Sold
2.2
2.9
For additional information regarding the non-GAAP financial measures, see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
First Quarter 2020 Financial Highlights
First Quarter 2020 Operational Highlights
COVID-19-Related Impact to Financials
Additional Highlights and Information
Forward Looking Statements
This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. In some cases, you can identify these forward-looking statements by the use of terms such as “expect,” “will,” “continue,” or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: our ability to develop innovative products and services that can help people during the COVID-19 crisis; any statements regarding the anticipated impact of COVID-19 on our business, including the effect of provisions under the CARES Act; the expected timing of the completion of the transaction with Google; the ability of Google and us to complete the proposed transaction considering the various conditions to the transaction, some of which are outside the parties’ control, including those conditions related to regulatory approvals; any statements concerning the expected development or competitive performance relating to Fitbit’s products and services; and any statements of assumptions underlying any of the foregoing. A number of important factors and uncertainties could cause actual results or events to differ materially from those described in these forward-looking statements, including without limitation: the impact of COVID-19 on our business, results of operations, or financial condition, including the development, manufacturing, and shipment of our products; general public health, market, political, economic and business conditions, including the impact of COVID-19 on global economic conditions and consumer confidence and spending; 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 and cost-effective manner; our ability to successfully develop, timely introduce, and achieve retail and customer acceptance of new products and services, or enhance existing products and services, including software and subscription services; our ability to accurately forecast consumer demand and adequately manage our inventory; our ability to ship products on the timelines we anticipate and avoid unexpected delays; our ability to detect, prevent or fix quality issues in our products and services; our ability to attract and 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 products from third parties or their suppliers; the ability of third parties to manufacture and ship quality products in a timely manner; seasonality of demand; the concentrated nature of our retailer and distributor base; product liability issues, security breaches, or other factors that may adversely affect product performance and overall market acceptance of our products and services; our ability to integrate acquired technologies and employees of acquired businesses into our operations, particularly in new geographies; warranty claims; the relatively new and unproven market for trackers and wearable devices; the ability of our channel partners to sell our products; litigation and related costs; the impact of privacy and data security laws; changes in tax laws; the impact of tariffs; the failure to satisfy any of the conditions to the consummation of the proposed transaction with Google, including the receipt of certain governmental and regulatory approvals; the occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement; the outcome of any legal proceedings that may be instituted against us related to the Merger Agreement or the proposed transaction; unexpected costs, charges or expenses resulting from the proposed transaction; the occurrence of a Company Material Adverse Effect (as defined in the Merger Agreement).
Additional risks and uncertainties are included under the caption “Risk Factors” in our Annual Report on Form 10-K for the full year ended December 31, 2019, which is available on our Investor Relations website at investor.fitbit.com and on the SEC website at www.sec.gov. Once filed with the SEC, additional information will be set forth in our Quarterly Report on Form 10-Q for the three months ended April 4, 2020. 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. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on such statements.
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 loss, non-GAAP operating loss before income taxes, non-GAAP net income (loss), non-GAAP basic/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, and adjusted EBITDA. 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, interest income, net, acquisition-related costs, and the related income tax effects of the aforementioned exclusions, that are recurring and will be reflected in our financial results for the foreseeable future. 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.
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. 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 4™, Fitbit Charge 3™, Fitbit Inspire HR™, Fitbit Inspire™, and Fitbit Ace 2™ activity trackers, as well as the Fitbit Ionic™ and Fitbit Versa™ family of smartwatches, Fitbit Flyer™ wireless headphones, and Fitbit Aria™ family of connected scales. Fitbit products are carried in over 39,000 retail stores and in over 100 countries around the globe. Powered by one of the world’s largest health and fitness social 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 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 United States 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.
Connect with us on Facebook, Instagram and Twitter and share your Fitbit experience
FITBIT, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
April 4, 2020
March 30, 2019
Revenue
$
188,158
$
271,890
Cost of revenue
133,236
182,437
Gross profit
54,922
89,453
Operating expenses:
Research and development
81,589
77,039
Sales and marketing
56,961
68,616
General and administrative
42,041
26,692
Total operating expenses
180,591
172,347
Operating loss
(125,669
)
(82,894
)
Interest income, net
1,293
3,466
Other income (expense), net
(4
)
1,273
Loss before income taxes
(124,380
)
(78,155
)
Income tax expense (benefit)
(144,674
)
1,310
Net income (loss)
$
20,294
$
(79,465
)
Net income (loss) per share:
Basic
$
0.08
$
(0.31
)
Diluted
$
0.07
$
(0.31
)
Shares used to compute net income (loss) per share:
Basic
265,661
253,124
Diluted
276,946
253,124
FITBIT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
April 4, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
251,997
$
334,479
Marketable securities
175,699
184,023
Accounts receivable, net
182,284
435,269
Inventories
105,745
136,752
Income tax receivable
139,827
573
Prepaid expenses and other current assets
56,694
28,656
Total current assets
912,246
1,119,752
Property and equipment, net
76,218
82,756
Operating lease right-of use-assets
70,137
70,225
Goodwill
64,812
64,812
Intangible assets, net
12,717
16,746
Deferred tax assets
4,066
4,111
Other assets
9,458
9,684
Total assets
$
1,149,654
$
1,368,086
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
90,801
$
194,626
Accrued liabilities
376,530
513,530
Operating lease liabilities
21,832
23,511
Deferred revenue
32,466
32,307
Income taxes payable
1,700
636
Total current liabilities
523,329
764,610
Long-term deferred revenue
6,176
8,535
Long-term operating lease liabilities
66,234
67,902
Other liabilities
32,860
39,776
Total liabilities
628,599
880,823
Stockholders’ equity:
Class A and Class B common stock
26
26
Additional paid-in capital
1,140,280
1,126,827
Accumulated other comprehensive income
233
188
Accumulated deficit
(619,484
)
(639,778
)
Total stockholders’ equity
521,055
487,263
Total liabilities and stockholders’ equity
$
1,149,654
$
1,368,086
FITBIT, INC.
Condensed Consolidated Statements of Cash Flow
(in thousands)
(unaudited)
Three Months Ended
April 4, 2020
March 30, 2019
Cash Flows from Operating Activities
Net income (loss)
$
20,294
$
(79,465
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Provision for doubtful accounts
6,486
32
Provision for excess and obsolete inventory
9,845
1,478
Depreciation
10,589
13,373
Non-cash lease expense
1,524
7,713
Accelerated depreciation of property and equipment
13
—
Amortization of intangible assets
4,029
2,060
Stock-based compensation
19,727
20,544
Deferred income taxes
46
(20
)
Other
5
(50
)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable
246,499
163,592
Inventories
20,301
(50,958
)
Prepaid expenses and other assets
(28,073
)
12,554
Income taxes receivable
(139,254
)
40
Fitbit force recall reserve
(41
)
46
Accounts payable
(104,378
)
(81,656
)
Accrued liabilities and other liabilities
(143,692
)
(69,962
)
Lease liabilities
(4,756
)
(4,972
)
Deferred revenue
(2,200
)
(2,259
)
Income taxes payable
1,064
257
Net cash used in operating activities
(81,972
)
(67,653
)
Cash Flows from Investing Activities
Purchase of property and equipment
(3,556
)
(6,096
)
Purchases of marketable securities
(59,735
)
(111,615
)
Maturities of marketable securities
68,191
128,309
Net cash provided by investing activities
4,900
10,598
Cash Flows from Financing Activities
Payment of financing lease liability
—
(597
)
Proceeds from issuance of common stock
458
931
Taxes paid related to net share settlement of restricted stock units
(5,868
)
(6,422
)
Net cash used in financing activities
(5,410
)
(6,088
)
Net decrease in cash and cash equivalents
(82,482
)
(63,143
)
Cash and cash equivalents at beginning of period
334,479
473,956
Cash and cash equivalents at end of period
$
251,997
$
410,813
FITBIT, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended
April 4, 2020
March 30, 2019
Non-GAAP gross profit:
GAAP gross profit
$
54,922
$
89,453
Stock-based compensation expense
2,179
1,430
Impact of restructuring
—
190
Acquisition-related costs
765
—
Intangible assets amortization
2,392
1,854
Non-GAAP gross profit
$
60,258
$
92,927
Non-GAAP gross margin (as a percentage of revenue):
GAAP gross margin
29.2
%
32.9
%
Stock-based compensation expense
1.2
0.5
Impact of restructuring
—
0.1
Acquisition-related costs
0.4
—
Intangible assets amortization
1.2
0.7
Non-GAAP gross margin
32.0
%
34.2
%
Non-GAAP research and development:
GAAP research and development
$
81,589
$
77,039
Stock-based compensation expense
(11,119
)
(11,988
)
Impact of restructuring
—
(1,550
)
Acquisition-related costs
(5,711
)
—
Non-GAAP research and development
$
64,759
$
63,501
Non-GAAP sales and marketing expense:
GAAP sales and marketing
$
56,961
$
68,616
Stock-based compensation expense
(2,775
)
(3,138
)
Impact of restructuring
—
(589
)
Acquisition-related costs
(2,404
)
—
Intangible assets amortization
(1,444
)
(135
)
Non-GAAP sales and marketing
$
50,338
$
64,754
Non-GAAP general and administrative expense:
GAAP general and administrative
$
42,041
$
26,692
Stock-based compensation expense
(3,654
)
(3,988
)
Impact of restructuring
—
(129
)
Acquisition-related costs
(6,892
)
—
Intangible assets amortization
(194
)
(71
)
Non-GAAP general and administrative
$
31,301
$
22,504
FITBIT, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended
April 4, 2020
March 30, 2019
Non-GAAP operating expenses:
GAAP operating expenses
$
180,591
$
172,347
Stock-based compensation expense
(17,548
)
(19,114
)
Impact of restructuring
—
(2,268
)
Acquisition-related costs
(15,007
)
—
Intangible assets amortization
(1,638
)
(206
)
Non-GAAP operating expenses
$
146,398
$
150,759
Non-GAAP operating loss and loss before income taxes:
GAAP operating loss
$
(125,669
)
$
(82,894
)
Stock-based compensation expense
19,727
20,544
Impact of restructuring
—
2,458
Acquisition-related costs
15,772
—
Intangible assets amortization
4,030
2,060
Non-GAAP operating loss
(86,140
)
(57,832
)
Interest income, net
1,293
3,466
Other income (expense), net
(4
)
1,273
Non-GAAP loss before income taxes
$
(84,851
)
$
(53,093
)
Non-GAAP net income (loss) and net loss per share:
Net income (loss)
$
20,294
$
(79,465
)
Stock-based compensation expense
19,727
20,544
Impact of restructuring
—
2,458
Acquisition-related costs
15,772
—
Intangible assets amortization
4,030
2,060
Income tax effect of non-GAAP adjustments
(124,412
)
16,335
Non-GAAP net loss
$
(64,589
)
$
(38,068
)
GAAP diluted shares
265,661
253,124
Other dilutive equity awards
—
—
Non-GAAP diluted shares
265,661
253,124
Non-GAAP diluted net loss per share
$
(0.24
)
$
(0.15
)
FITBIT, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended
April 4, 2020
March 30, 2019
Free cash flow:
Net cash used in operating activities
$
(81,972
)
$
(67,653
)
Purchases of property and equipment
(3,556
)
(6,096
)
Free cash flow
$
(85,528
)
$
(73,749
)
Net cash provided by investing activities
$
4,900
$
10,598
Net cash used in financing activities
$
(5,410
)
$
(6,088
)
Adjusted EBITDA:
Net income (loss)
$
20,294
$
(79,465
)
Stock-based compensation expense
19,727
20,544
Impact of restructuring
—
2,458
Acquisition-related costs
15,772
—
Depreciation and intangible assets amortization
14,620
15,433
Interest income, net
(1,293
)
(3,466
)
Income tax expense (benefit)
(144,674
)
1,310
Adjusted EBITDA
$
(75,554
)
$
(43,186
)
Stock-based compensation expense:
Cost of revenue
$
2,179
$
1,430
Research and development
11,119
11,988
Sales and marketing
2,775
3,138
General and administrative
3,654
3,988
Total stock-based compensation expense
$
19,727
$
20,544
FITBIT, INC.
Revenue by Geographic Region
(in thousands)
(unaudited)
Three Months Ended
April 4, 2020
March 30, 2019
United States
$
102,039
$
135,091
Americas, excluding United States
10,743
15,327
Europe, Middle East, and Africa
57,007
87,098
Asia Pacific
18,369
34,374
Total
$
188,158
$
271,890
View source version on businesswire.com: https://www.businesswire.com/news/home/20200506005823/en/
Investor Contact: Tom Hudson, (415) 604-4106 investor@fitbit.com
Media Contact: Jen Ralls, (415) 722-6937 PR@fitbit.com
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