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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 |
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(Mark one)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________________ to ________________
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Delaware
(State or other jurisdiction of
incorporation or organization)
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20-8920744
(I.R.S. Employer Identification No.)
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199 Fremont Street, 14th Floor
San Francisco, California
(Address of principal executive offices)
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94105
(Zip Code)
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Yes
þ
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No
¨
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Yes
þ
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No
¨
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Yes
¨
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No
þ
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Page
Number
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Condensed Consolidated Balance Sheets
—March 31, 2018 and December 31, 2017
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Condensed Consolidated Statements of Operations
—for the three months ended March 31, 2018 and April 1, 2017
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Condensed Consolidated Statements of Comprehensive
Loss—for the three months ended March 31, 2018 and April 1, 2017
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Condensed Consolidated Statements of Cash Flows
—for the three months ended March 31, 2018 and April 1, 2017
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•
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continued investments in research and development, sales and marketing and international expansion and the impact of those investments;
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•
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trends in our operating expenses, including personnel costs, research and development expense, sales and marketing expense and general and administrative expense;
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•
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competitors and competition in our markets;
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•
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our ability to anticipate and satisfy consumer preferences;
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•
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our smartwatches and their market acceptance and future potential;
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•
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our ability to develop new products and services, including recurring non-device revenue offerings, improve our existing products and services, or engage or expand our user base;
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•
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potential insurance recoveries;
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•
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our ability to accurately forecast consumer demand and adequately manage inventory;
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•
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our ability to deliver an adequate supply of product to meet demand;
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•
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our ability to maintain and promote our brand and expand brand awareness;
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•
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our ability to detect, prevent, or fix defects;
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•
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our reliance on third-party suppliers, contract manufacturers and logistics providers and our limited control over such parties;
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•
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trends in our quarterly operating results and other operating metrics;
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•
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trends in revenue, costs of revenue and gross margin;
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•
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legal proceedings and the impact of such proceedings;
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•
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the impact of changes in tax law on our operating results;
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•
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the impact of our adoption of accounting pronouncements;
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•
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the effect of seasonality on our results of operations;
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•
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our ability to attract and retain highly skilled employees;
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•
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our expectations to derive the substantial majority of our revenue from sales of devices;
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•
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our expectations with respect to trends in our revenue, gross margin, research and development expenses, sales and marketing expenses, and general and administrative expenses;
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•
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our expectations with respect to shifts in advertising and marketing spend;
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•
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growing our sales of subscription-based services
;
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•
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the impact of our acquisitions in enhancing the features and functionality of our devices;
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•
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the impact of foreign currency exchange rates;
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•
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releasing and shipping new products and services, and the timing thereof;
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•
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the sufficiency of our existing cash and cash equivalent balances and cash flow from operations to meet our working capital and capital expenditure needs for at least the next 12 months; and
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•
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general market, political, economic and business conditions, including potential changes in tariffs
.
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March 31, 2018
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December 31, 2017
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||||
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|
||||||
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|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
378,360
|
|
|
$
|
341,966
|
|
Marketable securities
|
|
279,994
|
|
|
337,334
|
|
||
Accounts receivable, net
|
|
214,355
|
|
|
406,019
|
|
||
Inventories
|
|
145,373
|
|
|
123,895
|
|
||
Income tax receivable
|
|
77,746
|
|
|
77,882
|
|
||
Prepaid expenses and other current assets
|
|
59,109
|
|
|
97,269
|
|
||
Total current assets
|
|
1,154,937
|
|
|
1,384,365
|
|
||
Property and equipment, net
|
|
104,530
|
|
|
104,908
|
|
||
Goodwill
|
|
60,929
|
|
|
51,036
|
|
||
Intangible assets, net
|
|
29,797
|
|
|
22,356
|
|
||
Deferred tax assets
|
|
4,158
|
|
|
3,990
|
|
||
Other assets
|
|
14,750
|
|
|
15,420
|
|
||
Total assets
|
|
$
|
1,369,101
|
|
|
$
|
1,582,075
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
132,910
|
|
|
$
|
212,731
|
|
Accrued liabilities
|
|
382,384
|
|
|
452,137
|
|
||
Deferred revenue
|
|
31,272
|
|
|
35,504
|
|
||
Income taxes payable
|
|
755
|
|
|
928
|
|
||
Total current liabilities
|
|
547,321
|
|
|
701,300
|
|
||
Long-term deferred revenue
|
|
5,176
|
|
|
6,928
|
|
||
Other liabilities
|
|
54,345
|
|
|
49,884
|
|
||
Total liabilities
|
|
606,842
|
|
|
758,112
|
|
||
Commitments and contingencies (Note 6)
|
|
|
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|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Class A and Class B common stock
|
|
24
|
|
|
24
|
|
||
Additional paid-in capital
|
|
976,022
|
|
|
956,060
|
|
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Accumulated other comprehensive income (loss)
|
|
329
|
|
|
(9
|
)
|
||
Accumulated deficit
|
|
(214,116
|
)
|
|
(132,112
|
)
|
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Total stockholders’ equity
|
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762,259
|
|
|
823,963
|
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Total liabilities and stockholders’ equity
|
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$
|
1,369,101
|
|
|
$
|
1,582,075
|
|
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Three Months Ended
|
||||||
|
March 31, 2018
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|
April 1, 2017
|
||||
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|
||||
Revenue
|
$
|
247,865
|
|
|
$
|
298,942
|
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Cost of revenue
|
133,742
|
|
|
180,643
|
|
||
Gross profit
|
114,123
|
|
|
118,299
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
89,336
|
|
|
87,758
|
|
||
Sales and marketing
|
72,052
|
|
|
91,174
|
|
||
General and administrative
|
36,088
|
|
|
30,746
|
|
||
Total operating expenses
|
197,476
|
|
|
209,678
|
|
||
Operating loss
|
(83,353
|
)
|
|
(91,379
|
)
|
||
Interest income, net
|
1,350
|
|
|
1,096
|
|
||
Other income, net
|
517
|
|
|
533
|
|
||
Loss before income taxes
|
(81,486
|
)
|
|
(89,750
|
)
|
||
Income tax benefit
|
(609
|
)
|
|
(29,671
|
)
|
||
Net loss
|
$
|
(80,877
|
)
|
|
$
|
(60,079
|
)
|
Net loss per share:
|
|
|
|
||||
Basic
|
$
|
(0.34
|
)
|
|
$
|
(0.27
|
)
|
Diluted
|
$
|
(0.34
|
)
|
|
$
|
(0.27
|
)
|
Shares used to compute net loss per share:
|
|
|
|
||||
Basic
|
239,431
|
|
|
226,511
|
|
||
Diluted
|
239,431
|
|
|
226,511
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
Net loss
|
$
|
(80,877
|
)
|
|
$
|
(60,079
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Cash flow hedges:
|
|
|
|
||||
Change in unrealized gain (loss) on cash flow hedges, net of tax benefit (expense) of $0 and $(202), respectively
|
664
|
|
|
(1,160
|
)
|
||
Less: reclassification for realized net gains included in net income, net of tax expense (benefit) of $0 and $(38), respectively
|
—
|
|
|
217
|
|
||
Net change, net of tax
|
664
|
|
|
(943
|
)
|
||
|
|
|
|
||||
Change in foreign currency translation adjustment
|
—
|
|
|
(271
|
)
|
||
Change in unrealized loss on available-for-sale investments,
net of tax
|
(326
|
)
|
|
76
|
|
||
Less reclassification for realized net gains
|
—
|
|
|
(9
|
)
|
||
Net change, net of tax
|
(326
|
)
|
|
67
|
|
||
Comprehensive loss
|
$
|
(80,539
|
)
|
|
$
|
(61,226
|
)
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net loss
|
$
|
(80,877
|
)
|
|
$
|
(60,079
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Provision for inventory obsolescence
|
6,337
|
|
|
3,997
|
|
||
Depreciation
|
10,456
|
|
|
9,140
|
|
||
Write-off of property and equipment
|
7,259
|
|
|
—
|
|
||
Amortization of intangible assets
|
1,748
|
|
|
1,377
|
|
||
Stock-based compensation
|
23,641
|
|
|
22,493
|
|
||
Deferred income taxes
|
(1,799
|
)
|
|
(5,005
|
)
|
||
Other
|
(275
|
)
|
|
(183
|
)
|
||
Changes in operating assets and liabilities, net of acquisition:
|
|
|
|
||||
Accounts receivable
|
191,982
|
|
|
282,917
|
|
||
Inventories
|
(27,307
|
)
|
|
27,193
|
|
||
Prepaid expenses and other assets
|
39,610
|
|
|
(976
|
)
|
||
Fitbit Force recall reserve
|
(132
|
)
|
|
(295
|
)
|
||
Accounts payable
|
(84,155
|
)
|
|
(176,619
|
)
|
||
Accrued liabilities and other liabilities
|
(70,147
|
)
|
|
(52,173
|
)
|
||
Deferred revenue
|
(6,010
|
)
|
|
(3,000
|
)
|
||
Income taxes payable
|
(173
|
)
|
|
351
|
|
||
Net cash provided by operating activities
|
10,158
|
|
|
49,138
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Purchase of property and equipment
|
(12,616
|
)
|
|
(28,157
|
)
|
||
Purchases of marketable securities
|
(141,404
|
)
|
|
(129,661
|
)
|
||
Sales of marketable securities
|
50,795
|
|
|
4,256
|
|
||
Maturities of marketable securities
|
148,041
|
|
|
178,028
|
|
||
Acquisition, net of cash acquired
|
(13,646
|
)
|
|
—
|
|
||
Net cash provided by investing activities
|
31,170
|
|
|
24,466
|
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Proceeds from issuance of common stock
|
992
|
|
|
2,581
|
|
||
Repayment of debt
|
(747
|
)
|
|
—
|
|
||
Taxes paid related to net share settlement of restricted stock units
|
(5,179
|
)
|
|
(3,127
|
)
|
||
Net cash used in financing activities
|
(4,934
|
)
|
|
(546
|
)
|
||
Net increase in cash and cash equivalents
|
36,394
|
|
|
73,058
|
|
||
Effect of exchange rate on cash and cash equivalents
|
—
|
|
|
(99
|
)
|
||
Cash and cash equivalents at beginning of period
|
341,966
|
|
|
301,320
|
|
||
Cash and cash equivalents at end of period
|
$
|
378,360
|
|
|
$
|
374,279
|
|
•
|
Retailers and distributors are generally allowed to return products that were originally sold through to an end-user under provisions of their contracts, called “open-box” returns, and such returns may be made at any time after the original sale.
|
•
|
All purchases through Fitbit.com are covered by a 45-day right of return.
|
•
|
Certain distributors are allowed stock rotation rights which are limited rights of return of products purchased during a prior period, generally one quarter.
|
•
|
Certain distributors and retailers are allowed return rights for defective products.
|
•
|
Certain distributors are offered price protection that allows for the right to a partial credit for unsold inventory held by the distributor if the Company reduces the selling price of a product.
|
|
Under ASC 605
|
Impact
|
Under ASC 606
|
||||||
|
|
|
|
||||||
|
|
|
|
||||||
Revenue
|
$
|
247,051
|
|
$
|
814
|
|
$
|
247,865
|
|
Accounts receivable, net
|
131,743
|
|
82,612
|
|
214,355
|
|
|||
Deferred revenue
|
37,514
|
|
(1,066
|
)
|
36,448
|
|
|||
Accrued liabilities
|
299,521
|
|
82,863
|
|
382,384
|
|
|||
Accumulated deficit
|
(213,302
|
)
|
(814
|
)
|
(214,116
|
)
|
|
March 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
169,430
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
169,430
|
|
U.S. government agencies
|
—
|
|
|
74,922
|
|
|
—
|
|
|
74,922
|
|
||||
Corporate debt securities
|
—
|
|
|
296,098
|
|
|
—
|
|
|
296,098
|
|
||||
Derivative assets
|
—
|
|
|
833
|
|
|
—
|
|
|
833
|
|
||||
Total
|
$
|
169,430
|
|
|
$
|
371,853
|
|
|
$
|
—
|
|
|
$
|
541,283
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
430
|
|
|
$
|
—
|
|
|
$
|
430
|
|
Stock warrant liability
|
—
|
|
|
—
|
|
|
164
|
|
|
164
|
|
||||
Total
|
$
|
—
|
|
|
$
|
430
|
|
|
$
|
164
|
|
|
$
|
594
|
|
|
December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
193,066
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193,066
|
|
U.S. government agencies
|
—
|
|
|
79,624
|
|
|
—
|
|
|
79,624
|
|
||||
Corporate debt securities
|
—
|
|
|
291,582
|
|
|
—
|
|
|
291,582
|
|
||||
Total
|
$
|
193,066
|
|
|
$
|
371,206
|
|
|
$
|
—
|
|
|
$
|
564,272
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
2,138
|
|
|
$
|
—
|
|
|
$
|
2,138
|
|
Stock warrant liability
|
—
|
|
|
—
|
|
|
208
|
|
|
208
|
|
||||
Total
|
$
|
—
|
|
|
$
|
2,138
|
|
|
$
|
208
|
|
|
$
|
2,346
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
$
|
117,904
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
117,904
|
|
|
$
|
117,904
|
|
|
$
|
—
|
|
Money market funds
|
169,430
|
|
|
—
|
|
|
—
|
|
|
169,430
|
|
|
169,430
|
|
|
—
|
|
||||||
U.S. government agencies
|
75,075
|
|
|
—
|
|
|
(153
|
)
|
|
74,922
|
|
|
—
|
|
|
74,922
|
|
||||||
Corporate debt securities
|
296,345
|
|
|
8
|
|
|
(255
|
)
|
|
296,098
|
|
|
91,026
|
|
|
205,072
|
|
||||||
Total
|
$
|
658,754
|
|
|
$
|
8
|
|
|
$
|
(408
|
)
|
|
$
|
658,354
|
|
|
$
|
378,360
|
|
|
$
|
279,994
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
$
|
115,028
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,028
|
|
|
$
|
115,028
|
|
|
$
|
—
|
|
Money market funds
|
193,066
|
|
|
—
|
|
|
—
|
|
|
193,066
|
|
|
193,066
|
|
|
—
|
|
||||||
U.S. government agencies
|
79,722
|
|
|
1
|
|
|
(99
|
)
|
|
79,624
|
|
|
6,595
|
|
|
73,029
|
|
||||||
Corporate debt securities
|
291,738
|
|
|
15
|
|
|
(171
|
)
|
|
291,582
|
|
|
27,277
|
|
|
264,305
|
|
||||||
Total
|
$
|
679,554
|
|
|
$
|
16
|
|
|
$
|
(270
|
)
|
|
$
|
679,300
|
|
|
$
|
341,966
|
|
|
$
|
337,334
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
||||
Due in one year
|
$
|
251,177
|
|
|
$
|
319,112
|
|
Due in one to two years
|
28,817
|
|
|
18,222
|
|
||
Total
|
$
|
279,994
|
|
|
$
|
337,334
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Balance Sheet Location
|
|
Fair Value Derivative
Assets
|
|
Fair Value Derivative Liabilities
|
|
Fair Value Derivative
Assets
|
|
Fair Value Derivative Liabilities
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow designated hedges
|
Prepaid expenses and other current assets
|
|
$
|
811
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash flow designated hedges
|
Accrued liabilities
|
|
—
|
|
|
146
|
|
|
—
|
|
|
—
|
|
||||
Hedges not designated
|
Prepaid expenses and other current assets
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Hedges not designated
|
Accrued liabilities
|
|
—
|
|
|
284
|
|
|
—
|
|
|
2,138
|
|
||||
Total fair value of derivative instruments
|
|
|
$
|
833
|
|
|
$
|
430
|
|
|
$
|
—
|
|
|
$
|
2,138
|
|
|
|
|
Three Months Ended
|
||||||
|
Income Statement Location
|
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
|
|
||||
Foreign exchange cash flow hedges:
|
|
|
|
|
|
||||
Gain (loss) recognized in OCI – effective portion
|
|
|
$
|
664
|
|
|
$
|
(958
|
)
|
Gain reclassified from OCI into income – effective portion
|
Revenue
|
|
—
|
|
|
755
|
|
||
Loss reclassified from OCI into income – effective portion
|
Operating expenses
|
|
—
|
|
|
(965
|
)
|
||
Gain recognized in income – ineffective portion
|
Other income, net
|
|
—
|
|
|
21
|
|
||
Gain recognized in income – excluded time value portion
|
Other income, net
|
|
—
|
|
|
183
|
|
||
|
|
|
|
|
|
||||
Foreign exchange balance sheet hedges:
|
|
|
|
|
|
||||
Loss recognized in income
|
Other income, net
|
|
(2,493
|
)
|
|
(3,046
|
)
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
Total amounts presented in the condensed consolidated statement of operations in which the effects of cash flow hedges are recorded in revenue
|
$
|
247,865
|
|
|
$
|
298,942
|
|
Total amounts presented in the condensed consolidated statement of operations in which the effects of cash flow hedges are recorded in operating expenses
|
197,476
|
|
|
209,678
|
|
||
Gains (losses) on foreign exchange contracts designated as cash flow hedges reclassified from OCI into revenue
|
—
|
|
|
755
|
|
||
Gains (losses) on foreign exchange contracts designated as cash flow hedges reclassified from OCI into operating expenses
|
—
|
|
|
(965
|
)
|
|
Gross Amounts Offset in the Condensed Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets
|
||||||||||||||||||||
March 31, 2018
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Net Amounts Presented
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts assets
|
$
|
833
|
|
|
$
|
—
|
|
|
$
|
833
|
|
|
$
|
430
|
|
|
$
|
—
|
|
|
$
|
403
|
|
Foreign exchange contracts liabilities
|
430
|
|
|
—
|
|
|
430
|
|
|
430
|
|
|
—
|
|
|
—
|
|
||||||
|
|||||||||||||||||||||||
|
Gross Amounts Offset in the Condensed Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets
|
||||||||||||||||||||
December 31, 2017
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Net Amounts Presented
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts liabilities
|
2,138
|
|
|
—
|
|
|
2,138
|
|
|
—
|
|
|
—
|
|
|
2,138
|
|
|
March 31, 2018
|
||
|
|
||
Beginning balances
|
42,432
|
|
|
Deferral of revenue
|
7,380
|
|
|
Recognition of deferred revenue
|
(13,364
|
)
|
|
Ending balances
|
$
|
36,448
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
Beginning balances
|
$
|
109,872
|
|
|
$
|
98,851
|
|
Increases
|
26,073
|
|
|
41,626
|
|
||
Write-offs/Returns taken
|
(53,333
|
)
|
|
(72,160
|
)
|
||
Ending balances
|
$
|
82,612
|
|
|
$
|
68,317
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
|
|
|
|
||||
Components
|
5,006
|
|
|
3,825
|
|
||
Finished goods
|
140,367
|
|
|
120,070
|
|
||
Total inventories
|
$
|
145,373
|
|
|
$
|
123,895
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
|
|
|
|
||||
POP displays, net
|
$
|
12,767
|
|
|
$
|
14,750
|
|
Prepaid marketing
|
9,103
|
|
|
6,074
|
|
||
Derivative assets
|
833
|
|
|
—
|
|
||
Prepaid expenses
|
14,070
|
|
|
24,204
|
|
||
Insurance receivable
|
900
|
|
|
37,300
|
|
||
Other
|
21,436
|
|
|
14,941
|
|
||
Total prepaid expenses and other current assets
|
$
|
59,109
|
|
|
$
|
97,269
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
|
|
|
|
||||
Tooling and manufacturing equipment
|
$
|
65,202
|
|
|
$
|
66,854
|
|
Furniture and office equipment
|
22,327
|
|
|
20,942
|
|
||
Purchased and internally-developed software
|
18,957
|
|
|
18,112
|
|
||
Leasehold improvements
|
63,374
|
|
|
58,431
|
|
||
Total property and equipment
|
169,860
|
|
|
164,339
|
|
||
Less: Accumulated depreciation and amortization
|
(65,330
|
)
|
|
(59,431
|
)
|
||
Property and equipment, net
|
$
|
104,530
|
|
|
$
|
104,908
|
|
|
Goodwill
|
||
|
|||
|
|
||
Balance at December 31, 2017
|
$
|
51,036
|
|
Goodwill acquired
|
9,893
|
|
|
Balance at March 31, 2018
|
$
|
60,929
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
Weighted Average Remaining Useful Life
(years)
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
35,988
|
|
|
$
|
(10,394
|
)
|
|
$
|
25,594
|
|
|
$
|
30,588
|
|
|
$
|
(8,738
|
)
|
|
$
|
21,850
|
|
|
3.8
|
Customer relationships
|
3,918
|
|
|
(164
|
)
|
|
3,754
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.9
|
||||||
Trademarks and other
|
1,150
|
|
|
(701
|
)
|
|
449
|
|
|
1,278
|
|
|
(772
|
)
|
|
506
|
|
|
0.8
|
||||||
Total intangible assets, net
|
$
|
41,056
|
|
|
$
|
(11,259
|
)
|
|
$
|
29,797
|
|
|
$
|
31,866
|
|
|
$
|
(9,510
|
)
|
|
$
|
22,356
|
|
|
|
|
Cost of Revenue
|
|
Operating Expenses
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Remaining 2018
|
$
|
5,602
|
|
|
$
|
579
|
|
|
$
|
6,181
|
|
2019
|
6,690
|
|
|
771
|
|
|
7,461
|
|
|||
2020
|
5,910
|
|
|
588
|
|
|
6,498
|
|
|||
2021
|
5,910
|
|
|
541
|
|
|
6,451
|
|
|||
2022
|
1,236
|
|
|
541
|
|
|
1,777
|
|
|||
Thereafter
|
246
|
|
|
1,183
|
|
|
1,429
|
|
|||
Total finite-lived intangible assets, net
|
$
|
25,594
|
|
|
$
|
4,203
|
|
|
$
|
29,797
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
Product warranty
|
$
|
71,975
|
|
|
$
|
87,882
|
|
Accrued revenue reserve from returns
|
82,612
|
|
|
—
|
|
||
Accrued manufacturing expense and freight
|
31,962
|
|
|
41,901
|
|
||
Accrued sales incentives
|
71,175
|
|
|
111,592
|
|
||
Accrued sales and marketing
|
21,741
|
|
|
44,401
|
|
||
Accrued research and development
|
5,276
|
|
|
8,983
|
|
||
Accrued co-op advertising and marketing development funds
|
21,688
|
|
|
30,408
|
|
||
Employee-related liabilities
|
18,204
|
|
|
33,266
|
|
||
Sales taxes and VAT payable
|
22,447
|
|
|
21,340
|
|
||
Inventory received but not billed
|
8,935
|
|
|
10,526
|
|
||
Accrued legal settlements and fees
|
8,365
|
|
|
36,693
|
|
||
Derivative liabilities
|
430
|
|
|
2,138
|
|
||
Other
|
17,574
|
|
|
23,007
|
|
||
Accrued liabilities
|
$
|
382,384
|
|
|
$
|
452,137
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
Beginning balances
|
$
|
87,882
|
|
|
$
|
99,923
|
|
Charged to cost of revenue
|
(2,481
|
)
|
|
18,937
|
|
||
Changes related to pre-existing warranties
|
(3,402
|
)
|
|
(2,440
|
)
|
||
Settlement of claims
|
(10,024
|
)
|
|
(25,961
|
)
|
||
Ending balances
|
$
|
71,975
|
|
|
$
|
90,459
|
|
(1)
|
Does not include reserves established as a result of the recall of the Fitbit Force. See the section titled “
—
Fitbit Force Recall Reserve” in the Company’s Annual Report on Form 10-K for additional information regarding such reserves.
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Currency Translation Adjustments
|
|
Unrealized Gains (Losses) on Available-for-Sale Investments
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2017
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
(75
|
)
|
|
$
|
(9
|
)
|
Other comprehensive income (loss) before reclassifications
|
664
|
|
|
—
|
|
|
(326
|
)
|
|
338
|
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
664
|
|
|
—
|
|
|
(326
|
)
|
|
338
|
|
||||
Balance at March 31, 2018
|
$
|
730
|
|
|
$
|
—
|
|
|
$
|
(401
|
)
|
|
$
|
329
|
|
Remaining 2018
|
$
|
31,572
|
|
2019
|
46,786
|
|
|
2020
|
42,998
|
|
|
2021
|
41,384
|
|
|
2022
|
41,529
|
|
|
Thereafter
|
58,889
|
|
|
Total future minimum lease payments
|
$
|
263,158
|
|
|
Stock Options Outstanding
|
|||||||||
|
Number of
Shares Subject
to
Stock Options
|
|
Weighted–
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|||||
Balance—December 31, 2017
|
21,386
|
|
|
$
|
3.01
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|||
Exercised
|
(565
|
)
|
|
1.76
|
|
|
|
|||
Forfeited or canceled
|
(134
|
)
|
|
4.76
|
|
|
|
|||
Balance—March 31, 2018
|
20,687
|
|
|
3.03
|
|
|
$
|
50,820
|
|
|
|
|
|
|
|
|
|||||
Stock options vested and expected to vest—March 31, 2018
|
20,638
|
|
|
3.03
|
|
|
50,763
|
|
||
Stock options exercisable—March 31, 2018
|
17,145
|
|
|
$
|
2.62
|
|
|
$
|
47,238
|
|
|
RSUs
Outstanding
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Unvested balance—December 31, 2017
|
19,188
|
|
|
$
|
9.13
|
|
Granted
|
10,199
|
|
|
5.20
|
|
|
Vested
|
(2,624
|
)
|
|
8.75
|
|
|
Forfeited or canceled
|
(1,119
|
)
|
|
8.94
|
|
|
Unvested balance—March 31, 2018
|
25,644
|
|
|
$
|
7.61
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
Cost of revenue
|
$
|
1,098
|
|
|
$
|
18
|
|
Research and development
|
14,671
|
|
|
14,685
|
|
||
Sales and marketing
|
3,447
|
|
|
3,635
|
|
||
General and administrative
|
4,425
|
|
|
4,155
|
|
||
Total stock-based compensation expense
|
$
|
23,641
|
|
|
$
|
22,493
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
Numerator:
|
|
|
|
||||
Net loss
|
$
|
(80,877
|
)
|
|
$
|
(60,079
|
)
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted-average shares of common stock—basic for Class A and Class B
|
239,431
|
|
|
226,511
|
|
||
Effect of dilutive securities
|
—
|
|
|
—
|
|
||
Weighted-average shares of common stock—diluted for Class A and Class B
|
239,431
|
|
|
226,511
|
|
||
Net loss per share:
|
|
|
|
||||
Basic
|
$
|
(0.34
|
)
|
|
$
|
(0.27
|
)
|
Diluted
|
$
|
(0.34
|
)
|
|
$
|
(0.27
|
)
|
|
Three Months Ended
|
||||
|
March 31, 2018
|
|
April 1, 2017
|
||
|
|
|
|
||
Stock options to purchase common stock
|
12,320
|
|
|
22,718
|
|
RSUs
|
12,762
|
|
|
11,143
|
|
Diluted impact of ESPP
|
104
|
|
|
233
|
|
Diluted common stock subject to vesting
|
—
|
|
|
129
|
|
Total
|
25,186
|
|
|
34,223
|
|
|
Three Months Ended
|
||||
|
March 31, 2018
|
|
April 1, 2017
|
||
|
|
|
|
||
B
|
11
|
%
|
|
*
|
|
A
|
*
|
|
|
10
|
%
|
F
|
*
|
|
|
10
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||
|
|
|
|
||
B
|
21
|
%
|
|
13
|
%
|
C
|
*
|
|
|
17
|
|
E
|
*
|
|
|
11
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
|
|
|
||||
United States
|
$
|
139,496
|
|
|
$
|
170,420
|
|
Americas excluding United States
|
16,100
|
|
|
19,968
|
|
||
Europe, Middle East, and Africa
|
64,538
|
|
|
87,772
|
|
||
APAC
|
27,731
|
|
|
20,782
|
|
||
Total
|
$
|
247,865
|
|
|
$
|
298,942
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
Net loss
|
$
|
(80,877
|
)
|
|
$
|
(60,079
|
)
|
Stock-based compensation expense
|
23,641
|
|
|
21,765
|
|
||
Litigation expense (credit)
|
765
|
|
|
(114
|
)
|
||
Restructuring
|
—
|
|
|
6,375
|
|
||
Depreciation and intangible assets amortization
|
12,204
|
|
|
10,517
|
|
||
Interest income, net
|
(1,350
|
)
|
|
(1,096
|
)
|
||
Income tax benefit
|
(609
|
)
|
|
(29,671
|
)
|
||
Adjusted EBITDA
|
$
|
(46,226
|
)
|
|
$
|
(52,303
|
)
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
Net cash provided by operating activities
|
$
|
10,158
|
|
|
$
|
49,138
|
|
Purchase of property and equipment
|
(12,616
|
)
|
|
(28,157
|
)
|
||
Non-GAAP free cash flow
|
$
|
(2,458
|
)
|
|
$
|
20,981
|
|
Net cash provided by investing activities
|
$
|
31,170
|
|
|
$
|
24,466
|
|
Net cash used in financing activities
|
$
|
(4,934
|
)
|
|
$
|
(546
|
)
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
(in thousands)
|
||||||
Consolidated Statements of Operations Data:
|
|
|
|
||||
Revenue
|
$
|
247,865
|
|
|
$
|
298,942
|
|
Cost of revenue
(1)
|
133,742
|
|
|
180,643
|
|
||
Gross profit
|
114,123
|
|
|
118,299
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
(1)
|
89,336
|
|
|
87,758
|
|
||
Sales and marketing
(1)
|
72,052
|
|
|
91,174
|
|
||
General and administrative
(1)
|
36,088
|
|
|
30,746
|
|
||
Total operating expenses
|
197,476
|
|
|
209,678
|
|
||
Operating loss
|
(83,353
|
)
|
|
(91,379
|
)
|
||
Interest income, net
|
1,350
|
|
|
1,096
|
|
||
Other income, net
|
517
|
|
|
533
|
|
||
Loss before income taxes
|
(81,486
|
)
|
|
(89,750
|
)
|
||
Income tax benefit
|
(609
|
)
|
|
(29,671
|
)
|
||
Net loss
|
$
|
(80,877
|
)
|
|
$
|
(60,079
|
)
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
|
(in thousands)
|
||||||
Stock-Based Compensation Expense:
|
|
|
|
||||
Cost of revenue
|
$
|
1,098
|
|
|
$
|
18
|
|
Research and development
|
14,671
|
|
|
14,685
|
|
||
Sales and marketing
|
3,447
|
|
|
3,635
|
|
||
General and administrative
|
4,425
|
|
|
4,155
|
|
||
Total stock-based compensation expense
|
$
|
23,641
|
|
|
$
|
22,493
|
|
|
Three Months Ended
|
||||
|
March 31, 2018
|
|
April 1, 2017
|
||
|
(as a percentage of revenue)
|
||||
Consolidated Statements of Operations Data:
|
|
|
|
||
Revenue
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
54
|
|
|
60
|
|
Gross profit
|
46
|
|
|
40
|
|
Operating expenses:
|
|
|
|
||
Research and development
|
36
|
|
|
29
|
|
Sales and marketing
|
29
|
|
|
31
|
|
General and administrative
|
15
|
|
|
10
|
|
Total operating expenses
|
80
|
|
|
70
|
|
Operating loss
|
(34
|
)
|
|
(30
|
)
|
Interest income, net
|
1
|
|
|
—
|
|
Other income, net
|
—
|
|
|
—
|
|
Loss before income taxes
|
(33
|
)
|
|
(30
|
)
|
Income tax benefit
|
—
|
|
|
(10
|
)
|
Net loss
|
(33
|
)%
|
|
(20
|
)%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
Revenue
|
$
|
247,865
|
|
|
$
|
298,942
|
|
|
$
|
(51,077
|
)
|
|
(17
|
)%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
Cost of revenue
|
$
|
133,742
|
|
|
$
|
180,643
|
|
|
$
|
(46,901
|
)
|
|
(26
|
)%
|
Gross profit
|
114,123
|
|
|
118,299
|
|
|
$
|
(4,176
|
)
|
|
(4
|
)%
|
||
Gross margin
|
46
|
%
|
|
40
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
Research and development
|
$
|
89,336
|
|
|
$
|
87,758
|
|
|
$
|
1,578
|
|
|
2
|
%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
Sales and marketing
|
$
|
72,052
|
|
|
$
|
91,174
|
|
|
$
|
(19,122
|
)
|
|
(21
|
)%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
General and administrative
|
$
|
36,088
|
|
|
$
|
30,746
|
|
|
$
|
5,342
|
|
|
17
|
%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
Interest income, net
|
$
|
1,350
|
|
|
$
|
1,096
|
|
|
$
|
254
|
|
|
23
|
%
|
Other income, net
|
517
|
|
|
533
|
|
|
$
|
(16
|
)
|
|
(3
|
)%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(dollars in thousands)
|
March 31, 2018
|
|
April 1, 2017
|
|
$
|
|
%
|
|||||||
Income tax benefit
|
$
|
(609
|
)
|
|
$
|
(29,671
|
)
|
|
$
|
29,062
|
|
|
(98
|
)%
|
Effective tax rate
|
0.8
|
%
|
|
33.1
|
%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
10,158
|
|
|
$
|
49,138
|
|
Investing activities
|
31,170
|
|
|
24,466
|
|
||
Financing activities
|
(4,934
|
)
|
|
(546
|
)
|
||
Net change in cash and cash equivalents
|
$
|
36,394
|
|
|
$
|
73,058
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
||||||
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
8-K
|
|
001-37444
|
|
10.1
|
|
3/26/2018
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1#
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FITBIT, INC.
|
|
|
|
|
|
Date:
|
May 4, 2018
|
|
|
/s/ WILLIAM ZERELLA
|
|
|
|
|
William Zerella
|
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1 Year Fitbit Chart |
1 Month Fitbit Chart |
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