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Fitbit 1Q18 results ?2
17:07 02-May-18
Fitbit has reported its first quarter results:
- a loss of 17 cents per share beats by 2 cents
- on $248M in sales, which beats by $1M
- 2Q revenue guidance for $285M +/- 10, which misses by $28M
- only 2.2M devices were sold, which is a 27% YoY decline
Management says that sell-through on Versa
has been the best in our company’s history, positioning us to expand our user base and capture greater share of the fast-growing smartwatch marketNonetheless, I am inclined to be cautious. Later comments in the press release seem to limit that statement to North America. I do think it's good that the company launched Versa with approximately 45% lower development hours than Ionic. However, if Versa sales are so good, why is the guidance so low? This quote offers a clue and shows how long the road ahead likely is:
We expect smartwatches to grow as a percentage of revenue, but our overall mix to continue to be skewed towards trackers.By contrast, I note that Garmin's report this morning showed at least 20% growth in its wearable sales. I also note that Fitbit stopped reporting active user numbers, although it said
Furthermore,
gross margin showed improvement this quarter, but that was
largely due to a one-off recovery of funds associated with a
bankrupt customer. They are expected to continue declining
for the remainder of the year as smart watches continue to
become a greater percentage of sales, and the company competes
on price rather than features. The new collaboration with
Google's health care cloud
also lacks detail, indicating that it will probably take time
to bear real fruit, despite the obvious potential.
I am
listening to the conference call now, but will only report
again if I hear something surprising. Questions are always
welcome, and a hands on review of the Versa should follow in
the weeks to come.