Fitbit Q2 Results Exceed Expectations, Versa Production To Increase

Wearables maker Fitbit reported a better-than-expected second quarter, and saw an impressive demand for its new Versa smartwatch device. The San Francisco-based company said it sold 2.7 million wearables in the quarter — with a selling price that increased 6 percent year over year — for an average of $106 per device, based on an overall mix of smartwatches.

The company said that sales of its Versa smartwatch outsold the combined totals of rivals Samsung, Garmin and Fossil. Smartwatches represented 55 percent of revenue during the quarter, up from 30 percent on a sequential basis, according to the firm. The new devices launched over the past year — including Fitbit Ionic, Versa, Fitbit Ace, Fitbit Aria 2 and accessory Fitbit Flyer — represented a combined 59 percent of revenue.

CEO James Park told analysts on a conference call that the demand exceeded supply for its smartwatches, and the company plans to ramp up production of Versa.

The company said 60 percent of activations came from new users, while 40 percent came from repeat customers. Of those repeat customers, 51 percent had been previously inactive for 90 days or more, up from 39 percent in the year-ago quarter. Fifty-six of active users watched Fitbit Feed during the quarter, and its female health tracking feature saw more than 2.9 million signups.

Fitbit reported a loss of $54.2 million (22 cents a share) in the quarter, as opposed to consensus estimates of a 24-cent loss per share. That’s compared with a year-ago loss of $19.3 million, or eight cents a share.

The firm said revenue came in at $299 million, compared with $353 million in the same quarter last year. For the third quarter, Fitbit said it expects revenue to fall 3 percent to between $370 million and $390 million for the period, and a non-GAAP loss of one to two cents per share. The company reiterated its full-year revenue guidance of about $1.5 billion. Park said the year-over-year decline in revenue from tracker devices will continue, helped by clean channel inventory levels, consumer feedback and the company’s product pipeline.

Fitbit has been promoting the wearables devices as an increasingly important companion for healthcare research and disease management, in areas ranging from diabetes to heart disease, cancer and mental health. The company has been working with Cedars-Sinai Medical Center and Johns Hopkins University to help with cancer research. It has also been working with Dexcom, a leading glucose-sensor maker, to help diabetics manage and track blood sugar levels using the device on their wrist.