Fitbit Beats on Revenue, Smartwatch Ready for Holiday Season
Fitbit the maker of wearable devices posted a drop in revenue for the quarter that was less than expected, and said everything was on track for the launch of its much-anticipated smartwatch for the upcoming holiday season.
Fitbit, which sells wristbands in an array of colors that monitor heartrate, tracks steps count, calories and sleep patterns, saw its shares move up 4.7% in extended Wednesday trading.
Once the leader in the wearables market, Fitbit recently has been struggling due to fierce competition from businesses like Xiaomi based in China and Cupertino, California tech giant Apple.
The company put the blame on the shift amongst consumers toward devices as well as smartwatches with more features for the drops in its revenue.
Apple Watch, which is fitness focused, with which devices at Fitbit compete, posted a surge of 50% in sales for its latest quarter.
Fitbit has been increasing its efforts to lower operating costs while looking to turn its business around. It labeled 2017 a transition year.
The company was executing its plan, said CEO James Park during a call after its earnings were posted.
Revenue from the maker of fitness bands fell close to 40% to just $353.2 million during the second quarter that ended July 1, but was above estimates by analyst of $341.5 million.
However, Fitbit narrowed its revenue forecast for the full year to between $1.55 billion and $1.7 billion compared to its previous forecast of between $1.5 billion and $1.7 billion.
Results for the second quarter give more confidence to the company that it can achieve its guidance for the full year, said an industry analyst on Wall Street.
For its second quarter, Fitbit posted a $58.2 million loss equal to 25 cents a share, in comparison with a $6.3 million profit equal to 3 cents a share for the same period one year earlier.
Excluding certain items, Fitbit posted a loss equal to 8 cents a share, which was far smaller than the estimates made by analysts on Wall Street of 15 cents.
Shares at the company through the end of business on Wednesday had dropped by 31% in 2017.
Xiaomi has made a big push into the wearable market and has made products with an array of features at low prices, which has hurt Fitbit and other players in the industry.