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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 $261 million, GAAP net loss per share of $(0.39), non-GAAP net loss per share of $(0.12), GAAP net loss of $(104) million, non-GAAP net loss of $(32) million, cash flow from operations of $33 million, and non-GAAP free cash flow of $28 million for its second quarter of 2020.
“We have been focused on helping our community stay physically active and mentally well during the pandemic. In this uncertain COVID-19 environment, we are seeing consumers turn to options that enable them to take charge of their health, such as Fitbit devices. In addition, many customers have taken advantage of Fitbit’s free premium trial offering and signed up for our subscription service,” 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 encouraged by the 12% year-over-year POS sales growth we’ve seen at retail and through Fitbit.com.”
Second Quarter 2020 Financial Summary
For the Three Months Ended
For the Six Months Ended
In millions, except percentages and per share amounts
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
GAAP Results
Revenue
$
261.3
$
313.6
$
449.4
$
585.4
Gross Margin
35.6
%
34.5
%
32.9
%
33.8
%
Net loss
$
(104.1)
$
(68.5)
$
(83.8)
$
(148.0)
Net loss Per Share
$
(0.39)
$
(0.27)
$
(0.31)
$
(0.58)
Non-GAAP Results
Gross Margin
37.6
%
35.6
%
35.2
%
34.9
%
Net loss
$
(31.5)
$
(35.8)
$
(96.1)
$
(73.8)
Net loss Per Share
$
(0.12)
$
(0.14)
$
(0.36)
$
(0.29)
Adjusted EBITDA
$
(31.8)
$
(30.8)
$
(107.3)
$
(74.0)
Devices Sold
2.5
3.5
4.6
6.5
For 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 2020 Financial Highlights
Second 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 pandemic; any statements regarding the anticipated impact of COVID-19 on our business; 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, and our Quarterly Report Form 10-Q for the three months ended April 4, 2020, which are available on our Investor Relations website at investor.fitbit.com and on the Security 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 three months ended July 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
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Revenue
$
261,272
$
313,556
$
449,430
$
585,446
Cost of revenue
168,230
205,342
301,466
387,779
Gross profit
93,042
108,214
147,964
197,667
Operating expenses:
Research and development
83,733
70,919
165,322
147,958
Sales and marketing
65,470
83,060
122,431
151,676
General and administrative
35,049
24,865
77,090
51,557
Total operating expenses
184,252
178,844
364,843
351,191
Operating loss
(91,210)
(70,630)
(216,879)
(153,524)
Interest income, net
13
2,622
1,306
6,088
Other income, net
2,237
461
2,233
1,734
Loss before income taxes
(88,960)
(67,547)
(213,340)
(145,702)
Income tax expense (benefit)
15,137
971
(129,537)
2,281
Net loss
$
(104,097)
$
(68,518)
$
(83,803)
$
(147,983)
Net loss per share:
Basic
$
(0.39)
$
(0.27)
$
(0.31)
$
(0.58)
Diluted
$
(0.39)
$
(0.27)
$
(0.31)
$
(0.58)
Shares used to compute net loss per share:
Basic
267,872
256,160
266,742
254,659
Diluted
267,872
256,160
266,742
254,659
FITBIT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
July 4, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
343,476
$
334,479
Marketable securities
104,755
184,023
Accounts receivable, net
215,394
435,269
Inventories
65,371
136,752
Income tax receivable
26,753
573
Prepaid expenses and other current assets
31,829
28,656
Total current assets
787,578
1,119,752
Property and equipment, net
78,552
82,756
Operating lease right-of use-assets
65,579
70,225
Goodwill
64,812
64,812
Intangible assets, net
9,668
16,746
Deferred tax assets
26,017
4,111
Other assets
10,269
9,684
Total assets
$
1,042,475
$
1,368,086
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
79,726
$
194,626
Accrued liabilities
358,288
513,530
Operating lease liabilities
21,687
23,511
Deferred revenue
32,589
32,307
Income taxes payable
1,448
636
Total current liabilities
493,738
764,610
Long-term deferred revenue
4,626
8,535
Long-term operating lease liabilities
61,410
67,902
Other liabilities
52,385
39,776
Total liabilities
612,159
880,823
Stockholders’ equity:
Class A and Class B common stock
27
26
Additional paid-in capital
1,153,520
1,126,827
Accumulated other comprehensive income
350
188
Accumulated deficit
(723,581)
(639,778)
Total stockholders’ equity
430,316
487,263
Total liabilities and stockholders’ equity
$
1,042,475
$
1,368,086
FITBIT, INC.
Condensed Consolidated Statements of Cash Flow
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Cash Flows from Operating Activities
Net loss
$
(104,097)
$
(68,518)
$
(83,803)
$
(147,983)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts
(441)
16
6,045
48
Provision for excess and obsolete inventory
3,415
2,644
13,260
4,122
Depreciation
10,453
16,733
21,042
30,106
Non-cash lease expense
6,953
3,902
8,477
11,615
Accelerated depreciation of property and equipment
613
170
626
170
Amortization of intangible assets
3,049
2,061
7,078
4,121
Stock-based compensation
19,770
20,547
39,497
41,091
Deferred income taxes
(21,865)
154
(21,819)
134
Other
319
212
324
162
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable
(32,669)
(8,031)
213,830
155,561
Inventories
36,243
9,775
56,544
(41,183)
Prepaid expenses and other assets
22,320
1,862
(5,753)
14,416
Income taxes receivable
113,074
(449)
(26,180)
(409)
Accounts payable
(19,279)
(18,861)
(123,657)
(100,517)
Accrued liabilities and other liabilities
2,464
(28,048)
(141,269)
(97,964)
Lease liabilities
(6,144)
(8,605)
(10,900)
(13,577)
Deferred revenue
(1,427)
(1,216)
(3,627)
(3,475)
Income taxes payable
(251)
(771)
813
(514)
Net cash provided by (used in) operating activities
32,500
(76,423)
(49,472)
(144,076)
Cash Flows from Investing Activities
Purchase of property and equipment
(4,994)
(4,731)
(8,550)
(10,827)
Purchases of marketable securities
—
(108,880)
(59,735)
(220,495)
Sales of marketable securities
—
2,016
—
2,016
Maturities of marketable securities
71,174
111,120
139,365
239,429
Net cash provided by (used in) investing activities
66,180
(475)
71,080
10,123
Cash Flows from Financing Activities
Payment of financing lease liability
(1,384)
(340)
(1,384)
(937)
Proceeds from issuance of common stock
544
5,881
1,002
6,812
Taxes paid related to net share settlement of restricted stock units
(6,361)
(4,227)
(12,229)
(10,649)
Net cash provided by (used in) financing activities
(7,201)
1,314
(12,611)
(4,774)
Net increase (decrease) in cash and cash equivalents
91,479
(75,584)
8,997
(138,727)
Cash and cash equivalents at beginning of period
251,997
410,813
334,479
473,956
Cash and cash equivalents at end of period
$
343,476
$
335,229
$
343,476
$
335,229
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
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Non-GAAP gross profit:
GAAP gross profit
$
93,042
$
108,214
$
147,964
$
197,667
Stock-based compensation expense
2,033
1,521
4,212
2,951
Impact of restructuring
—
—
—
190
Acquisition-related costs
1,497
—
2,262
—
Intangible assets amortization
1,548
1,853
3,940
3,707
Non-GAAP gross profit
$
98,120
$
111,588
$
158,378
$
204,515
Non-GAAP gross margin (as a percentage of revenue):
GAAP gross margin
35.6
%
34.5
%
32.9
%
33.8
%
Stock-based compensation expense
0.8
0.5
0.9
0.5
Impact of restructuring
—
—
—
—
Acquisition-related costs
0.6
—
0.5
—
Intangible assets amortization
0.6
0.6
0.9
0.6
Non-GAAP gross margin
37.6
%
35.6
%
35.2
%
34.9
%
Non-GAAP research and development:
GAAP research and development
$
83,733
$
70,919
$
165,322
$
147,958
Stock-based compensation expense
(11,442)
(11,892)
(22,561)
(23,880)
Impact of restructuring
—
—
—
(1,550)
Acquisition-related costs
(9,653)
—
(15,364)
—
Non-GAAP research and development
$
62,638
$
59,027
$
127,397
$
122,528
Non-GAAP sales and marketing expense:
GAAP sales and marketing
$
65,470
$
83,060
$
122,431
$
151,676
Stock-based compensation expense
(2,899)
(3,175)
(5,674)
(6,313)
Impact of restructuring
—
—
—
(589)
Acquisition-related costs
(1,836)
—
(4,240)
—
Intangible assets amortization
(1,354)
(136)
(2,797)
(271)
Non-GAAP sales and marketing
$
59,381
$
79,749
$
109,720
$
144,503
Non-GAAP general and administrative expense:
GAAP general and administrative
$
35,049
$
24,865
$
77,090
$
51,557
Stock-based compensation expense
(3,396)
(3,959)
(7,050)
(7,947)
Impact of restructuring
—
—
—
(129)
Acquisition-related costs
(10,934)
—
(17,826)
—
Intangible assets amortization
(147)
(72)
(341)
(143)
Non-GAAP general and administrative
$
20,572
$
20,834
$
51,873
$
43,338
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
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Non-GAAP operating expenses:
GAAP operating expenses
$
184,252
$
178,844
$
364,843
$
351,191
Stock-based compensation expense
(17,737)
(19,026)
(35,285)
(38,140)
Impact of restructuring
—
—
—
(2,268)
Acquisition-related costs
(22,423)
—
(37,430)
—
Intangible assets amortization
(1,501)
(208)
(3,138)
(414)
Non-GAAP operating expenses
$
142,591
$
159,610
$
288,990
$
310,369
Non-GAAP operating loss and loss before income taxes:
GAAP operating loss
$
(91,210)
$
(70,630)
$
(216,879)
$
(153,524)
Stock-based compensation expense
19,770
20,547
39,497
41,091
Impact of restructuring
—
—
—
2,458
Acquisition-related costs
23,920
—
39,692
—
Intangible assets amortization
3,049
2,061
7,078
4,121
Non-GAAP operating loss
(44,471)
(48,022)
(130,612)
(105,854)
Interest income, net
13
2,622
1,306
6,088
Other income, net
2,237
461
2,233
1,734
Non-GAAP loss before income taxes
$
(42,221)
$
(44,939)
$
(127,073)
$
(98,032)
Non-GAAP net loss and net loss per share:
Net loss
$
(104,097)
$
(68,518)
$
(83,803)
$
(147,983)
Stock-based compensation expense
19,770
20,547
39,497
41,091
Impact of restructuring
—
—
—
2,458
Acquisition-related costs
23,920
—
39,692
—
Intangible assets amortization
3,049
2,061
7,078
4,121
Income tax effect of non-GAAP adjustments
25,832
10,139
(98,582)
26,474
Non-GAAP net loss
$
(31,526)
$
(35,771)
$
(96,118)
$
(73,839)
GAAP diluted shares
267,872
256,160
266,742
254,659
Other dilutive equity awards
—
—
—
—
Non-GAAP diluted shares
267,872
256,160
266,742
254,659
Non-GAAP diluted net loss per share
$
(0.12)
$
(0.14)
$
(0.36)
$
(0.29)
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
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
Free cash flow:
Net cash provided by (used in) operating activities
$
32,500
$
(76,423)
$
(49,472)
$
(144,076)
Purchases of property and equipment
(4,994)
(4,731)
(8,550)
(10,827)
Free cash flow
$
27,506
$
(81,154)
$
(58,022)
$
(154,903)
Net cash provided by (used in) by investing activities
$
66,180
$
(475)
$
71,080
$
10,123
Net cash provided by (used in) financing activities
$
(7,201)
$
1,314
$
(12,611)
$
(4,774)
Adjusted EBITDA:
Net loss
$
(104,097)
$
(68,518)
$
(83,803)
$
(147,983)
Stock-based compensation expense
19,770
20,547
39,497
41,091
Impact of restructuring
—
—
—
2,458
Acquisition-related costs
23,920
—
39,692
—
Depreciation and intangible assets amortization
13,502
18,792
28,120
34,225
Interest expense, net
(13)
(2,622)
(1,306)
(6,088)
Income tax benefit (expense)
15,137
971
(129,537)
2,281
Adjusted EBITDA
$
(31,781)
$
(30,830)
$
(107,337)
$
(74,016)
Stock-based compensation expense:
Cost of revenue
$
2,033
$
1,521
$
4,212
$
2,951
Research and development
11,442
11,892
22,561
23,880
Sales and marketing
2,899
3,175
5,674
6,313
General and administrative
3,396
3,959
7,050
7,947
Total stock-based compensation expense
$
19,770
$
20,547
$
39,497
$
41,091
FITBIT, INC.
Revenue by Geographic Region
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
July 4, 2020
June 29, 2019
July 4, 2020
June 29, 2019
United States
$
164,729
$
180,862
$
266,768
$
315,953
Americas, excluding United States
10,455
19,178
21,198
34,505
Europe, Middle East, and Africa
72,375
87,563
129,381
174,661
Asia Pacific
13,713
25,953
32,083
60,327
Total
$
261,272
$
313,556
$
449,430
$
585,446
View source version on businesswire.com: https://www.businesswire.com/news/home/20200805005325/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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