Fitbit says new smartwatch will hit shelves by holidays; profits down in second quarter

By Jeff Lagasse
01:57 pm

Fitbit plans on making waves this holiday season. That’s when the company's long-awaited smartwatch, which has faced production issues and delays, will finally be released, CEO James Park said in a second-quarter earnings call.
The smartwatch will offer features such as health and fitness tracking, GPS capability, water resistance up to 50 meters and compatibility across platforms, as well as a battery that’s expected to last for days -- something that is certain to draw comparison to the Apple Watch's notoriously short charge.
The ultimate price has yet to be revealed, but Park said it will be “attractive,” in a range carefully calibrated to lure consumers. Which is exactly what Fitbit hopes to do: Apple’s smartwatch, which ranges from about $269 to $369, has started to incorporate more health and wellness functions and might well be digging into Fitbit’s sales; Fitbit reported a 40 percent drop in its second-quarter revenue, down to about $353 million in sales. Representing a little more than 3.4 million devices, that’s half of last year’s sales.
Overall, Fitbit reported a loss of more than $58 million in the quarter, down 25 cents per share. At this time last year they boasted a profit of $6.3 million and were up 3 cents per share.
Not all the financial news was bad, however. Fitbit’s full-year fiscal forecast is now between $1.55 billion and $1.7 billion, about half a billion more than its previous forecast. It posted revenues of $353.3 million for the quarter, while expectations had placed them in about the $341.6 million range.
That news is encouraging for the company, which earlier this year fell to third place overall in the wearable category, behind Apple and Chinese outfit Xiaomi.
Exact timing for the shipping of the new Fitbit watches is uncertain; CFO Bill Zerella said in the earnings call that the “vast majority of revenue in Q3 will be related to legacy products,” indicating a Christmas season launch.
Along with the smartwatch will come a developer kit, which will eventually allow companies to create compatible apps. Initially, a limited number of partners, selected by Fitbit, will be able to develop those apps.
"It will be really exciting and interesting to see how the developer community, primarily initially from Pebble, reacts to the tools," said Park. "I think developers are going to be surprised and excited by the ease of use and simplicity of the developer tools."
Park expressed confidence that the new smartwatch will help the company make inroads against its competitors, and the company is already looking beyond the product’s launch, examining technologies that could track sleep apnea and other conditions.
“We have a firm vision of the future,” he said. “Devices are a means to an end.”
The U.S. proved to be one of Fitbit’s eaker markets, with revenue in the States shrinking by 55 percent to $199 million, reflecting fewer Fitbits sold -- 3.4 million devices compared to 5.7 million last year.
The Asia-Pacific region proved to be a much stronger market. Fitbit saw a 21 percent growth in revenue in that region over last year, $21 million total. And because of spending cutbacks on advertising and marketing, it trimmed is operating costs by about 7 percent


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