Fitbit quarterly revenue down 19% on fading consumer demand

Fitbit’s fourth-quarter revenue fell 19 per cent, hurt by fading consumer demand for its once-popular wearable fitness trackers.

Revenue in the quarter - which includes the holiday shopping season - dropped to $573.8 million, the company said. Fitbit in January had forecast sales of $572 million to $580 million. Before then, analysts had been predicting $736.4 million, the average of estimates compiled by Bloomberg.

The company’s loss excluding certain costs was 56 cents a share. Analysts on average had projected a loss of 53 cents a share.

Chief executive James Park has been trying to prove that Fitbit is more than just a maker of trendy gadgets.

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The appeal of its wristbands has waned with consumers as the company faces competition from Apple ’s higher-end watch and cheaper Chinese models, and last month Fitbit said it would eliminate 6 per cent of its workforce.

Mr Park is seeking to diversify the business, including expanding into the smartwatch category and pushing its corporate-wellness offerings. His goal is to turn Fitbit into a digital-health company - one that relies less on consumers and focuses on selling to the health-care industry - but that strategy will take years to unfold.

Sales in the current period will be $270 million to $290 million, with the loss before some items projected to be 18 cents to 20 cents a share, Fitbit said. Analysts on average predicted first-quarter sales of $307.6 million and a loss of 16 cents. Fitbit reiterated the annual revenue forecast it gave in January, for $1.5 billion to $1.7 billion.

The company sold 6.5 million devices in the fourth quarter. That compares with more than 8.2 million in the quarter a year ago.

About two-thirds of the company’s total quarterly sales were generated in the US. Revenue in Europe, the Middle East and Africa increased 58 per cent to $134 million; Asia declined 56 per cent to $24.9 million and the Americas, excluding the US, fell 12 per cent to $33.4 million.

The company disclosed it spent $23 million for intellectual property and employees from smartwatch startup Pebble and $15 million for those assets from Vector Watch.

Bloomberg