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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 $314 million, GAAP net loss per share of $(0.27), non-GAAP net loss per share of $(0.14), GAAP net loss of $(69) million, non-GAAP net loss of $(36) million, cash used in operations of $(76) million and free cash flow of $(81) million for its second quarter of 2019.
“While we are disappointed to lower guidance for the year, we remain confident in our long-term transformation strategy and have demonstrated good results across key areas of the business. We saw growth in devices sold, increased active users and continued growth in our Fitbit Health Solutions channel, up 42% in the first half of 2019,” said James Park, co-founder and CEO. “In addition, we have made progress in diversifying our revenue towards building more predictable, recurring revenue streams with the launch of our premium services in two test markets. We are pleased with the initial results and expect a full launch this fall. Coupled with innovative hardware and software offerings, we believe we’re well positioned to bring more users to the Fitbit platform and continue to grow our business.”
Second Quarter 2019
For the Three Months Ended
For the Six Months Ended
In millions, except percentages and per share amounts
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
GAAP Results
Revenue
$
313.6
$
299.3
$
585.4
$
547.2
Gross Margin
34.5
%
39.8
%
33.8
%
42.6
%
Net Loss
$
(68.5
)
$
(118.3
)
$
(148.0
)
$
(199.1
)
Net Loss Per Share
$
(0.27
)
$
(0.49
)
$
(0.58
)
$
(0.83
)
Non-GAAP Results
Gross Margin
35.6
%
40.9
%
34.9
%
43.7
%
Net Loss
$
(35.8
)
$
(54.2
)
$
(73.8
)
$
(95.2
)
Net Loss Per Share
$
(0.14
)
$
(0.22
)
$
(0.29
)
$
(0.39
)
Adjusted EBITDA
$
(30.8
)
$
(55.8
)
$
(74.0
)
$
(102.0
)
Devices Sold
3.5
2.7
6.5
4.8
For additional information regarding the non-GAAP financial measures, see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below. Please note that certain terms used here, including “active user,” “activations,” and “repeat users,” are defined in our Annual Report on Form 10-K for the full year ended December 31, 2018 or our most recently filed Quarterly Report on Form 10-Q.
Second Quarter 2019 Financial Highlights
Second Quarter 2019 Operational Highlights
Third 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) 458-4148 or (929) 477-0324, access code 8960839. 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 of 2019 and full year 2019 and all underlying assumptions; trends in revenues, devices sold, average selling price, product mix, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss per share, adjusted EBITDA, non-GAAP effective tax rate and drivers, stock-based compensation expense, basic/diluted share count, capital expenditures, product returns, E&O costs, hosting costs, promotional activities, working capital, and free cash flow; expected Versa Lite sales, including impacts related to seasonality; growth in our Fitbit Health Solutions channel and non-device offerings and their associated revenue and impact on gross margins; growth of our user base; business strategies; introductions of new products and services, including timing of our premium and other software services and hardware offerings and their expected features and benefits; and retail and consumer demand for smartwatches and trackers; and all other statements that are not historical facts.
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 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 product from third parties or their suppliers; the ability of third parties to successfully 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 defects 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; 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, 2018 and our most recently filed Quarterly Report on Form 10-Q which are available on our Investor Relations website at investor.fitbit.com and on the Securities and Exchange Commission (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 quarter ended June 29, 2019. 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. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
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 operating income (loss) before income taxes, non-GAAP net income (loss), non-GAAP basic/diluted net income (loss) per share, non-GAAP free cash flow, effective non-GAAP tax rate, 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, 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 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. 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 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 2™ Wi-Fi Smart Scale. Fitbit products are carried in approximately 39,000 retail stores and in 87 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 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.
Connect with us on Facebook, Instagram or Twitter and share your Fitbit experience.
FITBIT, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended
Six Months Ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Revenue
$
313,556
$
299,344
$
585,446
$
547,209
Cost of revenue
205,342
180,329
387,779
314,071
Gross profit
108,214
119,015
197,667
233,138
Operating expenses:
Research and development
70,919
87,047
147,958
176,383
Sales and marketing
83,060
100,845
151,676
172,897
General and administrative
24,865
30,211
51,557
66,299
Total operating expenses
178,844
218,103
351,191
415,579
Operating loss
(70,630
)
(99,088
)
(153,524
)
(182,441
)
Interest income, net
2,622
2,177
6,088
3,527
Other income, net
461
2,258
1,734
2,775
Loss before income taxes
(67,547
)
(94,653
)
(145,702
)
(176,139
)
Income tax expense
971
23,615
2,281
23,006
Net loss
$
(68,518
)
$
(118,268
)
$
(147,983
)
$
(199,145
)
Net loss per share:
Basic
$
(0.27
)
$
(0.49
)
$
(0.58
)
$
(0.83
)
Diluted
$
(0.27
)
$
(0.49
)
$
(0.58
)
$
(0.83
)
Shares used to compute net loss per share:
Basic
256,160
242,898
254,659
241,227
Diluted
256,160
242,898
254,659
241,227
FITBIT, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
June 29, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
335,229
$
473,956
Marketable securities
229,708
249,493
Accounts receivable, net
258,599
414,209
Inventories
161,931
124,871
Income tax receivable
7,365
6,957
Prepaid expenses and other current assets
24,124
42,325
Total current assets
1,016,956
1,311,811
Property and equipment, net
91,718
106,286
Operating lease right-of use-assets
75,528
—
Goodwill
60,979
60,979
Intangible assets, net
19,499
23,620
Deferred tax assets
4,222
4,489
Other assets
9,278
8,362
Total assets
$
1,278,180
$
1,515,547
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
157,204
$
251,657
Accrued liabilities
332,857
437,234
Operating lease liabilities
23,907
—
Deferred revenue
28,076
29,400
Income taxes payable
578
1,092
Total current liabilities
542,622
719,383
Long-term deferred revenue
5,285
7,436
Long-term operating lease liabilities
75,309
—
Other liabilities
29,420
52,790
Total liabilities
652,636
779,609
Stockholders’ equity:
Class A and Class B common stock
25
25
Additional paid-in capital
1,092,306
1,055,046
Accumulated other comprehensive income (loss)
263
(66
)
Accumulated deficit
(467,050
)
(319,067
)
Total stockholders’ equity
625,544
735,938
Total liabilities and stockholders’ equity
$
1,278,180
$
1,515,547
FITBIT, INC.
Condensed Consolidated Statements of Cash Flow
(In thousands)
(unaudited)
Three Months Ended
Six Months Ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Cash Flows from Operating Activities
Net loss
$
(68,518
)
$
(118,268
)
$
(147,983
)
$
(199,145
)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts
16
—
48
—
Provision for inventory obsolescence
2,644
1,677
4,122
8,014
Depreciation
16,733
13,116
30,106
23,572
Non-cash lease expense
3,902
—
11,615
—
Write-off of property and equipment
170
226
170
7,485
Amortization of intangible assets
2,061
2,057
4,121
3,805
Stock-based compensation
20,547
25,857
41,091
49,498
Deferred income taxes
154
500
134
(1,299
)
Other
212
(144
)
162
(419
)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable
(8,031
)
(27,787
)
155,561
164,195
Inventories
9,775
3,090
(41,183
)
(24,217
)
Prepaid expenses and other assets
1,413
(1,986
)
14,007
37,624
Fitbit force recall reserve
90
(159
)
136
(291
)
Accounts payable
(18,861
)
19,971
(100,517
)
(64,184
)
Accrued liabilities and other liabilities
(28,138
)
(3,886
)
(98,100
)
(74,033
)
Lease liabilities
(8,605
)
—
(13,577
)
—
Deferred revenue
(1,216
)
(3,613
)
(3,475
)
(9,623
)
Income taxes payable
(771
)
21,974
(514
)
21,801
Net cash used in operating activities
(76,423
)
(67,375
)
(144,076
)
(57,217
)
Cash Flows from Investing Activities
Purchase of property and equipment
(4,731
)
(15,908
)
(10,827
)
(28,524
)
Purchases of marketable securities
(108,880
)
(83,408
)
(220,495
)
(224,812
)
Sales of marketable securities
2,016
22,975
2,016
73,770
Maturities of marketable securities
111,120
88,534
239,429
236,575
Acquisition, net of cash acquired
—
—
—
(13,646
)
Net cash provided by (used in) investing activities
(475
)
12,193
10,123
43,363
Cash Flows from Financing Activities
Repayment of debt
—
—
—
(747
)
Financing lease
(340
)
—
(937
)
—
Proceeds from issuance of common stock
5,881
9,746
6,812
10,738
Taxes paid related to net share settlement of restricted stock units
(4,227
)
(4,808
)
(10,649
)
(9,987
)
Net cash provided by (used in) financing activities
1,314
4,938
(4,774
)
4
Net decrease in cash and cash equivalents
(75,584
)
(50,244
)
(138,727
)
(13,850
)
Cash and cash equivalents at beginning of period
410,813
378,360
473,956
341,966
Cash and cash equivalents at end of period
$
335,229
$
328,116
$
335,229
$
328,116
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 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Non-GAAP gross profit:
GAAP gross profit
$
108,214
$
119,015
$
197,667
$
233,138
Stock-based compensation expense
1,521
2,032
2,951
3,130
Impact of restructuring
—
—
190
—
Intangible assets amortization
1,853
1,516
3,707
3,032
Non-GAAP gross profit
$
111,588
$
122,563
$
204,515
$
239,300
Non-GAAP gross margin (as a percentage of revenue):
GAAP gross margin
34.5
%
39.8
%
33.8
%
42.6
%
Stock-based compensation expense
0.5
0.7
0.5
0.6
Intangible assets amortization
0.6
0.5
0.6
0.6
Non-GAAP gross margin
35.6
%
40.9
%
34.9
%
43.7
%
Non-GAAP research and development:
GAAP research and development
$
70,919
$
87,047
$
147,958
$
176,383
Stock-based compensation expense
(11,892
)
(15,090
)
(23,880
)
(29,762
)
Impact of restructuring
—
—
(1,550
)
—
Non-GAAP research and development
$
59,027
$
71,957
$
122,528
$
146,621
Non-GAAP sales and marketing expense:
GAAP sales and marketing
$
83,060
$
100,845
$
151,676
$
172,897
Stock-based compensation expense
(3,175
)
(3,911
)
(6,313
)
(7,358
)
Impact of restructuring
—
—
(589
)
—
Intangible assets amortization
(136
)
(470
)
(271
)
(630
)
Non-GAAP sales and marketing
$
79,749
$
96,464
$
144,503
$
164,909
Non-GAAP general and administrative expense:
GAAP general and administrative
$
24,865
$
30,211
$
51,557
$
66,299
Stock-based compensation expense
(3,959
)
(4,824
)
(7,947
)
(9,249
)
Litigation expense
—
—
—
(765
)
Impact of restructuring
—
—
(129
)
—
Intangible assets amortization
(72
)
(71
)
(143
)
(143
)
Non-GAAP general and administrative
$
20,834
$
25,316
$
43,338
$
56,142
Non-GAAP operating expenses:
GAAP operating expenses
$
178,844
$
218,103
$
351,191
$
415,579
Stock-based compensation expense
(19,026
)
(23,825
)
(38,140
)
(46,369
)
Litigation expense
—
—
—
(765
)
Impact of restructuring
—
—
(2,268
)
—
Intangible assets amortization
(208
)
(541
)
(414
)
(773
)
Non-GAAP operating expenses
$
159,610
$
193,737
$
310,369
$
367,672
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 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Non-GAAP operating loss and loss before income taxes:
GAAP operating loss
$
(70,630
)
$
(99,088
)
$
(153,524
)
$
(182,441
)
Stock-based compensation expense
20,547
25,857
41,091
49,498
Litigation expense
—
—
—
765
Impact of restructuring
—
—
2,458
—
Intangible assets amortization
2,061
2,057
4,121
3,805
Non-GAAP operating loss
(48,022
)
(71,174
)
(105,854
)
(128,373
)
Interest income, net
2,622
2,177
6,088
3,527
Other income, net
461
2,258
1,734
2,775
Non-GAAP loss before income taxes
$
(44,939
)
$
(66,739
)
$
(98,032
)
$
(122,071
)
Non-GAAP net loss and net loss per share:
Net loss
$
(68,518
)
$
(118,268
)
$
(147,983
)
$
(199,145
)
Stock-based compensation expense
20,547
25,857
41,091
49,498
Litigation expense
—
—
—
765
Impact of restructuring
—
—
2,458
—
Intangible assets amortization
2,061
2,057
4,121
3,805
Income tax effect of non-GAAP adjustments
10,139
36,121
26,474
49,888
Non-GAAP net loss
$
(35,771
)
$
(54,233
)
$
(73,839
)
$
(95,189
)
GAAP diluted shares
256,160
242,898
254,659
241,227
Other dilutive equity awards
—
—
—
—
Non-GAAP diluted shares
256,160
242,898
254,659
241,227
Non-GAAP diluted net loss per share
$
(0.14
)
$
(0.22
)
$
(0.29
)
$
(0.39
)
Free cash flow:
Net cash used in operating activities
$
(76,423
)
$
(67,375
)
$
(144,076
)
$
(57,217
)
Purchases of property and equipment
(4,731
)
(15,908
)
(10,827
)
(28,524
)
Free cash flow
$
(81,154
)
$
(83,283
)
$
(154,903
)
$
(85,741
)
Net cash provided by (used in) investing activities
$
(475
)
$
12,193
$
10,123
$
43,363
Net cash provided by (used in) financing activities
$
1,314
$
4,938
$
(4,774
)
$
4
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 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Adjusted EBITDA:
Net loss
$
(68,518
)
$
(118,268
)
$
(147,983
)
$
(199,145
)
Stock-based compensation expense
20,547
25,857
41,091
49,498
Litigation expense
—
—
—
765
Impact of restructuring
—
—
2,458
—
Depreciation and intangible assets amortization
18,792
15,173
34,225
27,377
Interest income, net
(2,622
)
(2,177
)
(6,088
)
(3,527
)
Income tax expense
971
23,615
2,281
23,006
Adjusted EBITDA
$
(30,830
)
$
(55,800
)
$
(74,016
)
$
(102,026
)
Stock-based compensation expense:
Cost of revenue
$
1,521
$
2,032
$
2,951
$
3,130
Research and development
11,892
15,090
23,880
29,761
Sales and marketing
3,175
3,911
6,313
7,358
General and administrative
3,959
4,824
7,947
9,249
Total stock-based compensation expense
$
20,547
$
25,857
$
41,091
$
49,498
FITBIT, INC.
Revenue by Geographic Region
(In thousands)
(unaudited)
Three Months Ended
Six Months Ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
United States
$
180,862
$
182,451
$
315,953
$
321,947
Americas, excluding United States
19,178
15,838
34,505
31,938
Europe, Middle East, and Africa
87,563
65,969
174,661
130,507
APAC
25,953
35,086
60,327
62,817
Total
$
313,556
$
299,344
$
585,446
$
547,209
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731005858/en/
Investor Contact:
Tom Hudson, (415) 604-4106 investor@fitbit.com
Media Contact:
Jen Ralls, (415) 722-6937 PR@fitbit.com
1 Year Fitbit Chart |
1 Month Fitbit Chart |
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