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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 | |
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0.00 | 0.00% | 6.93 | 0 | 01:00:00 |
Fitbit, Inc. (NYSE:FIT), the leading global wearables brand, today reported revenue of $299 million, GAAP net loss per share of ($0.49), non-GAAP net loss per share of ($0.22), GAAP net loss of ($118) million, non-GAAP net loss of ($54) million, cash flow from operations of ($67) million and free cash flow of ($83) million for its second quarter of 2018.
“Our performance in Q2 represents the sixth consecutive quarter that we have delivered on our financial commitments, made important progress in transforming our business, and continued to adapt to the changing wearables market. Demand for Versa, our first ‘mass-appeal’ smartwatch, is very strong. Within the second quarter, Versa outsold Samsung, Garmin and Fossil smartwatches combined in North America, improving our position with retailers, solidifying shelf space for the Fitbit brand and providing a halo effect to our other product offerings,” said James Park, co-founder and CEO.
Second Quarter 2018
For the Three Months Ended For the Six Months Ended In millions, except percentages and per share amounts June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 GAAP Results Revenue $ 299.3 $ 353.3 $ 547.2 $ 652.2 Gross Margin 39.8 % 42.2 % 42.6 % 41.0 % Net Loss $ (118.3 ) $ (58.2 ) $ (199.1 ) $ (118.3 ) Net Loss Per Share $ (0.49 ) $ (0.25 ) $ (0.83 ) $ (0.52 ) Non-GAAP Results Gross Margin 40.9 % 43.0 % 43.7 % 41.6 % Net Loss $ (54.2 ) $ (19.3 ) $ (95.2 ) $ (53.7 ) Net Loss Per Share $ (0.22 ) $ (0.08 ) $ (0.39 ) $ (0.23 ) Adjusted EBITDA $ (55.8 ) $ (28.2 ) $ (102.0 ) $ (80.5 ) Devices Sold 2.7 3.4 4.8 6.3For additional information regarding the non-GAAP financial measures, see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
Second Quarter 2018 Financial Highlights
Second Quarter 2018 Operational Highlights
Third Quarter 2018 Guidance
Full Year 2018 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 (888) 468-2440 or (719) 325-4750, access code 7830797. 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 third quarter 2018 and full year 2018; the rate of decline in tracker sales; expected device mix; trends in revenue, average selling price, operating expenses, capital expenditures, free cash flow, gross margins, non-GAAP basic net (loss) income per share, stock-based compensation expense and non-GAAP effective tax rate; growth in the EMEA region; channel inventory levels; future product launches; product supply, including supply of Versa; consumer and retail demand for smartwatches and trackers; and any potential financial impact of tariffs. 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 connected health and fitness 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. 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 loss, non-GAAP operating loss before income taxes, non-GAAP net loss, non-GAAP diluted net loss per share, non-GAAP free cash flow, 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 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.
Guidance for non-GAAP financial measures excludes Jawbone litigation costs, stock-based compensation, impact of restructuring, 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 Blaze®, Fitbit Charge 2®, 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 86 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 Six Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Revenue $ 299,344 $ 353,299 $ 547,209 $ 652,241 Cost of revenue 180,329 204,054 314,071 384,697 Gross profit 119,015 149,245 233,138 267,544 Operating expenses: Research and development 87,047 80,543 176,383 168,301 Sales and marketing 100,845 100,732 172,897 191,906 General and administrative 30,211 31,379 66,299 62,125 Total operating expenses 218,103 212,654 415,579 422,332 Operating loss (99,088 ) (63,409 ) (182,441 ) (154,788 ) Interest income, net 2,177 193 3,527 1,289 Other income, net 2,258 303 2,775 836 Loss before income taxes (94,653 ) (62,913 ) (176,139 ) (152,663 ) Income tax expense (benefit) 23,615 (4,673 ) 23,006 (34,344 ) Net loss $ (118,268 ) $ (58,240 ) $ (199,145 ) $ (118,319 ) Net loss per share: Basic $ (0.49 ) $ (0.25 ) $ (0.83 ) $ (0.52 ) Diluted $ (0.49 ) $ (0.25 ) $ (0.83 ) $ (0.52 ) Shares used to compute net loss per share: Basic 242,898 230,322 241,227 228,788 Diluted 242,898 230,322 241,227 228,788FITBIT, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
June 30, 2018
December 31, 2017
Assets Current assets: Cash and cash equivalents $ 328,116 $ 341,966 Marketable securities 252,347 337,334 Accounts receivable, net 242,038 406,019 Inventories 140,430 123,895 Income tax receivable 78,385 77,882 Prepaid expenses and other current assets 63,227 97,269 Total current assets 1,104,543 1,384,365 Property and equipment, net 110,185 104,908 Goodwill 61,058 51,036 Intangible assets, net 27,740 22,356 Deferred tax assets 3,528 3,990 Other assets 16,147 15,420 Total assets $ 1,323,201 $ 1,582,075 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 155,970 $ 212,731 Accrued liabilities 377,058 452,137 Deferred revenue 28,116 35,504 Income taxes payable 22,729 928 Total current liabilities 583,873 701,300 Long-term deferred revenue 4,719 6,928 Other liabilities 55,650 49,884 Total liabilities 644,242 758,112 Stockholders’ equity: Class A and Class B common stock 25 24 Additional paid-in capital 1,006,639 956,060 Accumulated other comprehensive income (loss) 4,679 (9 ) Accumulated deficit (332,384 ) (132,112 ) Total stockholders’ equity 678,959 823,963 Total liabilities and stockholders’ equity $ 1,323,201 $ 1,582,075 FITBIT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (unaudited) Three Months Ended Six Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Cash Flows from Operating Activities Net loss $ (118,268 ) $ (58,240 ) $ (199,145 ) $ (118,319 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Provision for inventory obsolescence 1,677 4,412 8,014 8,409 Depreciation 13,116 10,059 23,572 19,199 Write-off of property and equipment 226 5,851 7,485 5,250 Amortization of intangible assets 2,057 1,376 3,805 2,753 Stock-based compensation 25,857 21,966 49,498 44,459 Deferred income taxes 500 21,142 (1,299 ) 16,137 Other (144 ) 1,010 (419 ) 1,428 Changes in operating assets and liabilities, net of acquisition: Accounts receivable (27,787 ) (21,752 ) 164,195 261,165 Inventories 3,090 54,293 (24,217 ) 81,486 Prepaid expenses and other assets (1,986 ) (49,348 ) 37,624 (50,324 ) Fitbit Force recall reserve (159 ) (205 ) (291 ) (500 ) Accounts payable 19,971 (40,340 ) (64,184 ) (216,959 ) Accrued liabilities and other liabilities (3,886 ) 8,210 (74,033 ) (43,963 ) Deferred revenue (3,613 ) (2,477 ) (9,623 ) (5,477 ) Income taxes payable 21,974 (1,867 ) 21,801 (1,516 ) Net cash (used in) provided by operating activities (67,375 ) (45,910 ) (57,217 ) 3,228 Cash Flows from Investing Activities Purchase of property and equipment (15,908 ) (11,660 ) (28,524 ) (39,817 ) Purchases of marketable securities (83,408 ) (188,017 ) (224,812 ) (317,678 ) Sales of marketable securities 22,975 9,550 73,770 13,806 Maturities of marketable securities 88,534 173,116 236,575 351,144 Acquisition, net of cash acquired — — (13,646 ) — Net cash provided by investing activities 12,193 (17,011 ) 43,363 7,455 Cash Flows from Financing Activities Repayment of debt — — (747 ) — Proceeds from issuance of common stock 9,746 8,826 10,738 11,407Taxes paid related to net share settlement of restricted stock units
(4,808 ) (2,107 ) (9,987 ) (5,234 ) Net cash provided by financing activities 4,938 6,719 4 6,173 Net (decrease) increase in cash and cash equivalents (50,244 ) (56,202 ) (13,850 ) 16,856 Effect of exchange rate on cash and cash equivalents — 631 — 532 Cash and cash equivalents at beginning of period 378,360 374,279 341,966 301,320 Cash and cash equivalents at end of period $ 328,116 $ 318,708 $ 328,116 $ 318,708 FITBIT, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except percentages and per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Non-GAAP gross profit: GAAP gross profit $ 119,015 $ 149,245 $ 233,138 $ 267,544 Stock-based compensation expense 2,032 1,492 3,130 1,510 Impact of restructuring — — — 37 Intangible assets amortization 1,516 1,319 3,032 2,638 Non-GAAP gross profit $ 122,563 $ 152,056 $ 239,300 $ 271,729 Non-GAAP gross margin (as a percentage of revenue): GAAP gross margin 39.8 % 42.2 % 42.6 % 41.0 % Stock-based compensation expense 0.7 0.4 0.6 0.2 Impact of restructuring — — — — Intangible assets amortization 0.5 0.4 0.6 0.4 Non-GAAP gross margin 40.9 % 43.0 % 43.7 % 41.6 % Non-GAAP research and development: GAAP research and development $ 87,047 $ 80,543 $ 176,383 $ 168,301 Stock-based compensation expense (15,090 ) (12,648 ) (29,762 ) (26,992 ) Impact of restructuring — — — (2,744 ) Non-GAAP research and development $ 71,957 $ 67,895 $ 146,621 $ 138,565 Non-GAAP sales and marketing: GAAP sales and marketing $ 100,845 $ 100,732 $ 172,897 $ 191,906 Stock-based compensation expense (3,911 ) (3,987 ) (7,358 ) (7,235 ) Impact of restructuring — — — (2,000 ) Intangible assets amortization (470 ) — (630 ) — Non-GAAP sales and marketing $ 96,464 $ 96,745 $ 164,909 $ 182,671 Non-GAAP general and administrative: GAAP general and administrative $ 30,211 $ 31,379 $ 66,299 $ 62,125 Stock-based compensation expense (4,824 ) (3,839 ) (9,249 ) (7,994 ) Litigation expense — (1,533 ) (765 ) (1,419 ) Impact of restructuring — — — (1,594 ) Intangible assets amortization (71 ) (58 ) (143 ) (115 ) Non-GAAP general and administrative $ 25,316 $ 25,949 $ 56,142 $ 51,003 Non-GAAP operating expenses: GAAP operating expenses $ 218,103 $ 212,654 $ 415,579 $ 422,332 Stock-based compensation expense (23,825 ) (20,474 ) (46,369 ) (42,221 ) Litigation expense — (1,533 ) (765 ) (1,419 ) Impact of restructuring — — — (6,338 ) Intangible assets amortization (541 ) (58 ) (773 ) (115 ) Non-GAAP operating expenses $ 193,737 $ 190,589 $ 367,672 $ 372,239 FITBIT, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except percentages and per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Non-GAAP operating loss and loss before income taxes: GAAP operating loss $ (99,088 ) $ (63,409 ) $ (182,441 ) $ (154,788 ) Stock-based compensation expense 25,857 21,966 49,498 43,731 Litigation expense — 1,533 765 1,419 Impact of restructuring — — — 6,375 Intangible assets amortization 2,057 1,377 3,805 2,753 Non-GAAP operating loss (71,174 ) (38,533 ) (128,373 ) (100,510 ) Interest income, net 2,177 193 3,527 1,289 Other income, net 2,258 303 2,775 836 Non-GAAP operating loss before income taxes $ (66,739 ) $ (38,037 ) $ (122,071 ) $ (98,385 ) Non-GAAP net loss and net loss per share: Net loss $ (118,268 ) $ (58,240 ) $ (199,145 ) $ (118,319 ) Stock-based compensation expense 25,857 21,966 49,498 43,731 Litigation expense — 1,533 765 1,419 Impact of restructuring — — — 6,375 Intangible assets amortization 2,057 1,377 3,805 2,753 Income tax effect of non-GAAP adjustments 36,121 14,056 49,888 10,335 Non-GAAP net loss $ (54,233 ) $ (19,308 ) $ (95,189 ) $ (53,706 ) GAAP diluted shares 242,898 230,322 241,227 228,788 Other dilutive equity awards — — — — Non-GAAP diluted shares 242,898 230,322 241,227 228,788 Non-GAAP diluted net loss per share $ (0.22 ) $ (0.08 ) $ (0.39 ) $ (0.23 ) Non-GAAP free cash flow: Net cash provided by operating activities $ (67,375 ) $ (45,910 ) $ (57,217 ) $ 3,228 Purchases of property and equipment (15,908 ) (11,660 ) (28,524 ) (39,817 ) Non-GAAP free cash flow $ (83,283 ) $ (57,570 ) $ (85,741 ) $ (36,589 ) Net cash provided by investing activities $ 12,193 $ (17,011 ) $ 43,363 $ 7,455 Net cash used in financing activities $ 4,938 $ 6,719 $ 4 $ 6,173 FITBIT, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except percentages and per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 Adjusted EBITDA: Net loss $ (118,268 ) $ (58,240 ) $ (199,145 ) $ (118,319 ) Stock-based compensation expense* 25,857 21,966 49,498 43,731 Litigation expense — 1,533 765 1,419 Impact of restructuring — — — 6,375 Depreciation and intangible assets amortization 15,173 11,435 27,377 21,952 Interest income, net (2,177 ) (193 ) (3,527 ) (1,289 ) Income tax expense (benefit) 23,615 (4,673 ) 23,006 (34,344 ) Adjusted EBITDA $ (55,800 ) $ (28,172 ) $ (102,026 ) $ (80,475 ) Stock-based compensation expense: Cost of revenue $ 2,032 $ 1,492 $ 3,130 $ 1,510 Research and development 15,090 12,648 29,761 27,333 Sales and marketing 3,911 3,987 7,358 7,622 General and administrative 4,824 3,839 9,249 7,994 Total stock-based compensation expense* $ 25,857 $ 21,966 $ 49,498 $ 44,459 * A portion of stock-based compensation expense for the six months ended July 1, 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 GEOGRAPHICAL REGION (In thousands) (unaudited) Three Months Ended Six Months Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 United States $ 182,451 $ 199,201 $ 321,947 $ 369,621 Americas, excluding United States 15,838 24,412 31,938 44,380 Europe, Middle East, and Africa 65,969 108,601 130,507 196,373 APAC 35,086 21,085 62,817 41,867Total
$ 299,344 $ 353,299 $ 547,209 $ 652,241
View source version on businesswire.com: https://www.businesswire.com/news/home/20180801005819/en/
Fitbit, Inc.Investor Contact:Tom Hudson, 415-604-4106investor@fitbit.comMedia Contact:Jen Ralls, 415-722-6937PR@fitbit.com
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