Smartwatches and repeat customers helped Fitbit beat analyst revenue expectations in the third quarter of 2018 — and those two factors could become even more important in the months to come. Enterprise healthcare, too, could provide more fuel for future growth, company executives said.
That was one of the main messages taken from the wearable provider’s Q3 financials, released Wednesday afternoon (Oct. 31). Total revenue reached $394 million — beating analyst expectations of $381 million — thought the growth was nearly flat compared to the $393 million in revenue for the same period last year. As for earnings, the company’s reported Q3 of $0.04 per share beat analyst expectations of a loss of a $0.01 per share. Fitbit posted a Q3 net loss of $2.1 million compared with a $113 million for the same period last year.
During Q3, Fitbit sold 3.5 million wearable devices. Thanks to a boost in smartwatch sales, the company’s average selling price of devices overall increased 3 percent, to $108. Smartwatches accounted for 49 percent of Fitbit revenue in the third quarter, up from 10 percent for the same period a year ago. “We have demonstrated we can quickly and effectively gain market share” in smartwatches, Fitbit CEO and co-founder James Park told analysts and investors on the Q3 conference call Wednesday.
Apple Watch still drives the wearables market — the company saw sales jump 60 percent in 2017, with 16 million units shipped. Apple has maintained dominance in the category with a 41 percent market share, according to a recent report. The five best-selling smartwatches are the Apple Series 1, Fitbit Versa, Amazfit Bip, Apple Series 3 and Fitbit Ionic.
Fitbit numbers for actual Q3 smartphone shipments were not immediately available, but the company said in June that it had shipped more than one million Fitbit Versa devices since they went on sale on April 16. Company executives on Wednesday said they plan to broaden their smartwatch portfolio over time
Beyond smartwatches, Park said that in the third quarter of 2018, 43 percent of total device activations came from repeat customers — a stat he called evidence of “further stabilization” for Fitbit, which earlier this year disappointed investors with its revenue and device shipment figures.
Company executives on Wednesday also said they are working with federal regulators on tests of Fitbit technology for more use in healthcare.
Already, Fitbit technology is used for the management of chronic conditions. Parks said that in Q3, the company experienced 26 percent growth in its healthcare business — but provided no specific figures beyond that. During the call, executives told analysts that more transparency about that part of the business will be forthcoming as healthcare takes on more importance for Fitbit — specifically, via the Fitbit Care platform that launched in September. As well, earlier this year, the company announced a pair-up with Google to make it easier for doctors to access health information as tracked on Fitbit devices.
For the fourth quarter, Fitbit projected revenue of more than $560 million — analyst expectations stood at $569 million on Wednesday — with the average sale price of a device also increasing, though the amount was not specified.