Fitbit Posts Strong Gains, But Smartwatch Sales Stumble

Posted on August 1, 2019 by Paul Thurrott in Fitbit, Wearables with 1 Comment

Fitbit posted strong earnings for the quarter ending June 30, but sales of its Versa Lite smartwatch were weaker than expected. As a result, the firm was forced to lower its revenue guidance for the rest of 2019.

“While we are disappointed to lower guidance for the year, we remain confident in our long-term transformation strategy and have demonstrated good results across key areas of the business,” Fitbit co-founder and CEO James Park said in a prepared statement. “We saw growth in devices sold, increased active users and continued growth in our Fitbit Health Solutions channel, up 42 percent in the first half of 2019.”

Fitbit posted a net loss of $35.8 million on revenues of $313.6 million, the latter of which is an improvement of about 5 percent year-over-year (Fitbit reported a net loss of $54.2 million in the same quarter a year ago.)

In the good news department, device sales overall were up a whopping 31 percent YOY. Fitness tracker sales were the star, representing 59 percent of Fitbit’s revenues thanks to 51 percent growth in units sold.

But smartwatches stumbled, despite the launch of the affordable Versa Lite model earlier this year. Fitbit’s smartwatch revenues fell 29 percent YOY and the product family represented just 38 percent of the firm’s revenues.

“Versa Lite received good consumer reviews, but we saw that consumers were willing to pay more for a smartwatch with additional features or look for discounting versus everyday value,” Mr. Parks said in a post-earnings conference call. As you may recall, Fitbit launched Versa Lite in March, and sales were initially quite good: In the previous quarter, the firm reported a 117 percent increase in smartwatches YOY. At the time, it said that Versa Lite was its biggest success story so far in 2019.

To counter this, Fitbit promises a “full launch” this fall. Presumably, the new lineup will be tilted more towards fitness trackers and premium smartwatch designs.

“Coupled with innovative hardware and software offerings, we believe we’re well-positioned to bring more users to the Fitbit platform and continue to grow our business,” Mr. Park added.

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Comments (1)

One response to “Fitbit Posts Strong Gains, But Smartwatch Sales Stumble”

  1. jwpear

    I get the feeling Fitbit will eventually fold with pressure from Apple on the high end and what seems like a mountain of copycat low end fitness trackers. Maybe they'll adjust styling, pricing, and features to make both ends more attractive to customers.

    I currently have a 2.5 year old Blaze that's been pretty solid. I've had my eye on the Apple Watch and the Fitbit Ionic for a while. I haven't pulled the trigger on either because they both seem to have some compromises that I'm unwilling to accept at their price points. Apple Watch is battery life and lack of sleep tracking. Ionic is styling (just seems ugly, but Blaze isn't exactly svelte), tiny screen relative to its overall size, and age (not willing to spend that much on something that's not getting much in the way of feature updates at this point).

    The Versa isn't a bad looking tracker/watch. I wish it had a dedicated GPS option. And I don't understand why it gets less battery life than the Ionic.

    It kind of feels like Apple's smartwatch ecosystem is the place to jump into at this point. They seem to be doing more and will eventually add the missing features I'm looking for.

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