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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 $364 million, GAAP net loss per share of $(0.20), non-GAAP net loss per share of $(0.03), GAAP net loss of $(54) million, non-GAAP net loss of $(8) million, cash flow from operations of $(13) million and non-GAAP free cash flow of $(27) million for its third quarter of 2020.
“Fitbit continued to play an important role for our community during this uncertain COVID-19 environment by supporting the mental health and overall wellness of our users with innovative products, features and services. We introduced Fitbit Sense, our most advanced health smartwatch that helps users understand and manage their stress and is also our first device with an ECG app. Fitbit is committed to making health data more accessible and actionable with the new Health Metrics Dashboard, which tracks metrics like breathing rate, heart rate variability and SpO2 – all important metrics when it comes to illness detection,” said James Park, co-founder and CEO. “The response to our new offerings has been strong across both devices and software. We achieved a key financial milestone this quarter with an annual run-rate for consumer services revenue of more than $100 million, highlighting the continued opportunity we have to deepen our relationship with our users.”
Third Quarter 2020 Financial Summary
For the Three Months Ended
For the Nine Months Ended
In millions, except percentages and per share amounts
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
GAAP Results
Revenue
$
363.9
$
347.2
$
813.4
$
932.6
Gross Margin
37.3
%
31.1
%
34.9
%
32.8
%
Net loss
$
(54.5
)
$
(51.9
)
$
(138.3
)
$
(199.9
)
Net loss Per Share
$
(0.20
)
$
(0.20
)
$
(0.52
)
$
(0.78
)
Non-GAAP Results
Gross Margin
38.1
%
32.0
%
36.4
%
33.9
%
Net loss
$
(8.3
)
$
(26.7
)
$
(105.0
)
$
(100.5
)
Net loss Per Share
$
(0.03
)
$
(0.10
)
$
(0.39
)
$
(0.39
)
Adjusted EBITDA
$
—
$
(19.4
)
$
(108.1
)
$
(93.5
)
Devices Sold
3.3
3.5
7.9
10.0
For additional information regarding the non-GAAP financial measures, see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
Third Quarter 2020 Financial Highlights
Third 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, features and services that support the mental health and overall wellness of users during the COVID-19 pandemic; our continuing opportunity through non-device offerings to deepen our relationship with our users, including any statements regarding annual run-rate related to such offerings; 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, including the sourcing of key components, shipment and sales 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 on Form 10-Q for the three months ended July 4, 2020, which are available on our Investor Relations website at investor.fitbit.com and on the Securities 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 October 3, 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 and income (loss) before income taxes, non-GAAP net income (loss), non-GAAP diluted net loss per share, free cash flow, non-GAAP research and development expense, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, 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 (expense), 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 Sense™, the Fitbit Versa™ family of smartwatches, Fitbit Charge 4™, Fitbit Inspire 2™, and Fitbit Ace 2™ activity trackers, and Fitbit Aria Air smart scale. Fitbit products are carried in approximately 39,000 retail stores and in 100+ countries around the globe. 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’s paid subscription service, Fitbit Premium™, provides advanced analytics and actionable guidance in the Fitbit app to help you reach your health and fitness goals. Fitbit Premium + Health Coaching provides one-on-one virtual coaching with expert health coaches and personalized plans based on your Fitbit data. 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 www.fitbit.com/legal/trademark-list. Third-party trademarks are the property of their respective owners.
Looking for motivation? You’re in the right place – join us on Facebook, Instagram, LinkedIn, Twitter and YouTube. We want to hear from you, share your Fitbit experience with us here.
FITBIT, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
Revenue
$
363,932
$
347,200
$
813,362
$
932,646
Cost of revenue
228,120
239,248
529,586
627,027
Gross profit
135,812
107,952
283,776
305,619
Operating expenses:
Research and development
90,771
65,693
256,093
213,651
Sales and marketing
60,726
71,296
183,157
222,972
General and administrative
35,493
23,083
112,583
74,640
Total operating expenses
186,990
160,072
551,833
511,263
Operating loss
(51,178
)
(52,120
)
(268,057
)
(205,644
)
Interest income (expense), net
(268
)
2,388
1,038
8,476
Other income (expense), net
965
(492
)
3,198
1,242
Loss before income taxes
(50,481
)
(50,224
)
(263,821
)
(195,926
)
Income tax expense (benefit)
3,971
1,669
(125,566
)
3,950
Net loss
$
(54,452
)
$
(51,893
)
$
(138,255
)
$
(199,876
)
Net loss per share:
Basic
$
(0.20
)
$
(0.20
)
$
(0.52
)
$
(0.78
)
Diluted
$
(0.20
)
$
(0.20
)
$
(0.52
)
$
(0.78
)
Shares used to compute net loss per share:
Basic
270,443
258,753
267,958
256,046
Diluted
270,443
258,753
267,958
256,046
FITBIT, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
October 3, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
373,384
$
334,479
Marketable securities
43,051
184,023
Accounts receivable, net
358,451
435,269
Inventories
98,996
136,752
Income tax receivable
40,252
573
Prepaid expenses and other current assets
35,013
28,656
Total current assets
949,147
1,119,752
Property and equipment, net
74,684
82,756
Operating lease right-of use-assets
62,144
70,225
Goodwill
64,812
64,812
Intangible assets, net
8,395
16,746
Deferred tax assets
15,330
4,111
Other assets
12,334
9,684
Total assets
$
1,186,846
$
1,368,086
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
174,603
$
194,626
Accrued liabilities
431,215
513,530
Operating lease liabilities
22,390
23,511
Deferred revenue
49,317
32,307
Income taxes payable
2,439
636
Total current liabilities
679,964
764,610
Long-term deferred revenue
5,327
8,535
Long-term operating lease liabilities
56,703
67,902
Other liabilities
55,960
39,776
Total liabilities
797,954
880,823
Stockholders’ equity:
Class A and Class B common stock
27
26
Additional paid-in capital
1,166,720
1,126,827
Accumulated other comprehensive income
178
188
Accumulated deficit
(778,033
)
(639,778
)
Total stockholders’ equity
388,892
487,263
Total liabilities and stockholders’ equity
$
1,186,846
$
1,368,086
FITBIT, INC.
Condensed Consolidated Statements of Cash Flow
(in thousands)
(unaudited)
Three Months Ended
Nine Months Ended
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
Cash Flows from Operating Activities
Net loss
$
(54,452
)
$
(51,893
)
$
(138,255
)
$
(199,876
)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts
(5,584
)
(19
)
461
29
Provision for excess and obsolete inventory
929
1,041
14,189
5,163
Depreciation
12,290
13,109
33,332
43,215
Non-cash lease expense
2,605
6,346
11,082
17,961
Accelerated depreciation of property and equipment
100
(1
)
726
169
Amortization of intangible assets
1,273
1,979
8,351
6,100
Stock-based compensation
18,380
18,084
57,877
59,175
Deferred income taxes
10,530
484
(11,289
)
618
Other
261
(212
)
585
(50
)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable
(137,474
)
(86,944
)
76,356
68,617
Inventories
(35,134
)
(84,317
)
21,410
(125,500
)
Prepaid expenses and other assets
(3,383
)
(8,536
)
(9,136
)
5,880
Income taxes receivable
(13,499
)
6,401
(39,679
)
5,992
Accounts payable
100,629
112,343
(23,028
)
11,826
Accrued liabilities and other liabilities
74,506
37,201
(66,763
)
(60,763
)
Lease liabilities
(3,532
)
(7,398
)
(14,432
)
(20,975
)
Deferred revenue
17,429
889
13,802
(2,586
)
Income taxes payable
990
407
1,803
(107
)
Net cash used in operating activities
(13,136
)
(41,036
)
(62,608
)
(185,112
)
Cash Flows from Investing Activities
Purchase of property and equipment
(13,869
)
(15,450
)
(22,419
)
(26,277
)
Purchases of marketable securities
—
(67,474
)
(59,735
)
(287,969
)
Sales of marketable securities
—
—
—
2,016
Maturities of marketable securities
61,512
82,703
200,877
322,132
Acquisition, net of cash acquired
—
(2,625
)
—
(2,625
)
Net cash provided by (used in) investing activities
47,643
(2,846
)
118,723
7,277
Cash Flows from Financing Activities
Payment of financing lease liability
—
(1,302
)
(1,384
)
(2,239
)
Proceeds from issuance of common stock
1,988
232
2,990
7,044
Taxes paid related to net share settlement of restricted stock units
(6,587
)
(2,846
)
(18,816
)
(13,495
)
Net cash used in financing activities
(4,599
)
(3,916
)
(17,210
)
(8,690
)
Net increase (decrease) in cash and cash equivalents
29,908
(47,798
)
38,905
(186,525
)
Cash and cash equivalents at beginning of period
343,476
335,229
334,479
473,956
Cash and cash equivalents at end of period
$
373,384
$
287,431
$
373,384
$
287,431
FITBIT, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
Non-GAAP gross profit:
GAAP gross profit
$
135,812
$
107,952
$
283,776
$
305,619
Stock-based compensation expense
1,846
1,446
6,059
4,397
Impact of restructuring
—
—
—
190
Acquisition-related costs
(33
)
—
1,463
—
Intangible assets amortization
1,126
1,773
5,066
5,480
Non-GAAP gross profit
$
138,751
$
111,171
$
296,364
$
315,686
Non-GAAP gross margin (as a percentage of revenue):
GAAP gross margin
37.3
%
31.1
%
34.9
%
32.8
%
Stock-based compensation expense
0.5
0.4
0.7
0.5
Impact of restructuring
—
—
—
—
Acquisition-related costs
—
—
0.2
—
Intangible assets amortization
0.3
0.5
0.6
0.6
Non-GAAP gross margin
38.1
%
32.0
%
36.4
%
33.9
%
Non-GAAP research and development:
GAAP research and development
$
90,771
$
65,693
$
256,093
$
213,651
Stock-based compensation expense
(10,633
)
(10,557
)
(33,194
)
(34,437
)
Impact of restructuring
—
—
—
(1,550
)
Acquisition-related costs
(8,391
)
—
(23,755
)
—
Non-GAAP research and development
$
71,747
$
55,136
$
199,144
$
177,664
Non-GAAP sales and marketing expense:
GAAP sales and marketing
$
60,726
$
71,296
$
183,157
$
222,972
Stock-based compensation expense
(2,701
)
(2,587
)
(8,376
)
(8,900
)
Impact of restructuring
—
—
—
(589
)
Acquisition-related costs
(1,328
)
—
(5,568
)
—
Intangible assets amortization
—
(135
)
(2,797
)
(406
)
Non-GAAP sales and marketing
$
56,697
$
68,574
$
166,416
$
213,077
Non-GAAP general and administrative expense:
GAAP general and administrative
$
35,493
$
23,083
$
112,583
$
74,640
Stock-based compensation expense
(3,197
)
(3,494
)
(10,248
)
(11,441
)
Impact of restructuring
—
—
—
(129
)
Acquisition-related costs
(8,553
)
—
(26,380
)
—
Intangible assets amortization
(147
)
(71
)
(488
)
(214
)
Non-GAAP general and administrative
$
23,596
$
19,518
$
75,467
$
62,856
FITBIT, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
Non-GAAP operating expenses:
GAAP operating expenses
$
186,990
$
160,072
$
551,833
$
511,263
Stock-based compensation expense
(16,531
)
(16,638
)
(51,818
)
(54,778
)
Impact of restructuring
—
—
—
(2,268
)
Acquisition-related costs
(18,272
)
—
(55,703
)
—
Intangible assets amortization
(147
)
(206
)
(3,285
)
(620
)
Non-GAAP operating expenses
$
152,040
$
143,228
$
441,027
$
453,597
Non-GAAP operating loss and loss before income taxes:
GAAP operating loss
$
(51,178
)
$
(52,120
)
$
(268,057
)
$
(205,644
)
Stock-based compensation expense
18,377
18,084
57,877
59,175
Impact of restructuring
—
—
—
2,458
Acquisition-related costs
18,239
—
57,166
—
Intangible assets amortization
1,273
1,979
8,351
6,100
Non-GAAP operating loss
(13,289
)
(32,057
)
(144,663
)
(137,911
)
Interest income (expense), net
(268
)
2,388
1,038
8,476
Other income (expense), net
965
(492
)
3,198
1,242
Non-GAAP loss before income taxes
$
(12,592
)
$
(30,161
)
$
(140,427
)
$
(128,193
)
Non-GAAP net loss and net loss per share:
Net loss
$
(54,452
)
$
(51,893
)
$
(138,255
)
$
(199,876
)
Stock-based compensation expense
18,377
18,084
57,877
59,175
Impact of restructuring
—
—
—
2,458
Acquisition-related costs
18,239
—
57,166
—
Intangible assets amortization
1,273
1,979
8,351
6,100
Income tax effect of non-GAAP adjustments
8,255
5,141
(90,136
)
31,615
Non-GAAP net loss
$
(8,308
)
$
(26,689
)
$
(104,997
)
$
(100,528
)
GAAP diluted shares
270,443
258,753
267,958
256,046
Other dilutive equity awards
—
—
—
—
Non-GAAP diluted shares
270,443
258,753
267,958
256,046
Non-GAAP diluted net loss per share
$
(0.03
)
$
(0.10
)
$
(0.39
)
$
(0.39
)
FITBIT, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except percentages and per share amounts)
(unaudited)
Three Months Ended
Nine Months Ended
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
Free cash flow:
Net cash used in operating activities
$
(13,136
)
$
(41,036
)
$
(62,608
)
$
(185,112
)
Purchases of property and equipment
(13,869
)
(15,450
)
(22,419
)
(26,277
)
Free cash flow
$
(27,005
)
$
(56,486
)
$
(85,027
)
$
(211,389
)
Net cash provided by (used in) by investing activities
$
47,643
$
(2,846
)
$
118,723
$
7,277
Net cash used in financing activities
$
(4,599
)
$
(3,916
)
$
(17,210
)
$
(8,690
)
Adjusted EBITDA:
Net loss
$
(54,452
)
$
(51,893
)
$
(138,255
)
$
(199,876
)
Stock-based compensation expense
18,377
18,084
57,877
59,175
Impact of restructuring
—
—
—
2,458
Acquisition-related costs
18,239
—
57,166
—
Depreciation and intangible assets amortization
13,563
15,089
41,683
49,314
Interest expense (income), net
268
(2,388
)
(1,038
)
(8,476
)
Income tax expense (benefit)
3,971
1,669
(125,566
)
3,950
Adjusted EBITDA
$
(34
)
$
(19,439
)
$
(108,133
)
$
(93,455
)
Stock-based compensation expense:
Cost of revenue
$
1,846
$
1,446
$
6,059
$
4,397
Research and development
10,633
10,557
33,194
34,437
Sales and marketing
2,701
2,587
8,376
8,900
General and administrative
3,197
3,494
10,248
11,441
Total stock-based compensation expense
$
18,377
$
18,084
$
57,877
$
59,175
FITBIT, INC.
Revenue by Geographic Region
(in thousands)
(unaudited)
Three Months Ended
Nine Months Ended
October 3, 2020
September 28, 2019
October 3, 2020
September 28, 2019
United States
$
195,001
$
206,654
$
461,769
$
522,607
Americas, excluding United States
25,960
16,722
47,158
51,227
Europe, Middle East, and Africa
102,401
82,951
231,782
257,612
Asia Pacific
40,570
40,873
72,653
101,200
Total
$
363,932
$
347,200
$
813,362
$
932,646
View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005647/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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